Share of Mortgage Loans in Forbearance Declines Further in July

According to the Mortgage Bankers Association’s (MBA) new monthly Loan Monitoring Survey (LMS) released on Monday (8-21-23), the total number of loans in forbearance as of July 31st decreased 5 basis points to 0.39% of servicers’ portfolio volume, down from 0.44% in June. The MBA estimates that 195,000 homeowners remain in forbearance plans. The MBA notes that mortgage servicers have provided forbearance to approximately 7.9 million borrowers since March 2020.

In June, the share of Fannie Mae and Freddie Mac loans in forbearance decreased 1 basis point to 0.20%. Ginnie Mae loans in forbearance decreased by 13 basis points to 0.80%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 7 basis points to 0.45%.

Commenting on the July LMS report, Marina Walsh, MBA’s Vice President of Industry Analysis, said:

“The prevalence of forbearance plans has dramatically dropped since 2020, and the reasons that borrowers are in forbearance are changing. About two-thirds of borrowers are still in forbearance because of the effects of COVID-19, but a growing share of borrowers are in forbearance for other reasons that cause temporary hardship such as financial distress or natural disasters. With the COVID-19 national emergency lifted, Fannie Mae and Freddie Mac recently announced the retirement of certain COVID-19 flexibilities relating to forbearance plans and workouts.

Given the recent natural disasters impacting California, Washington, and Hawaii, forbearance is one way for mortgage servicers to mitigate the potential impacts on homeowners.”