Share of Mortgage Loans in Forbearance Increases in June—First Upward Movement Since October 2022

According to the Mortgage Bankers Association’s (MBA) new Loan Monitoring Survey (LMS) released on Tuesday, the total number of loans in forbearance as of June 30th increased to 0.23% of servicers’ portfolio volume, up from 0.21% in May.

The MBA estimates that 115,000 homeowners are in forbearance plans. Mortgage servicers have provided forbearance to approximately 8.2 million borrowers since March 2020.

In June, the share of Fannie Mae and Freddie Mac loans in forbearance increased 1 basis point to 0.11%; Ginnie Mae loans in forbearance increased 5 basis points to 0.44%; and the share for portfolio loans and private-label securities (PLS) remained unchanged at 0.31%.

Adding background and analysis to the MBA’s May forbearance report, MBA Vice President of Industry Analysis Marina Walsh said:

“The number of loans in forbearance increased in June for the first time since October of 2022. Furthermore, the performance of both loan workouts and overall servicing portfolios weakened, particularly for government loans.

There were several factors that caused the forbearance rate to rise in June, including the uptick of severe weather events that hit multiple regions of the country as well as early signs of consumer distress that could potentially impact borrowers’ ability to pay their mortgages. Additionally, June’s month-end fell on a Sunday, and the weekend timing typically leads to higher mortgage defaults in any given month.

The performance of servicing portfolios in May was solid, with about 96% of borrowers making their mortgage payments on time. There was a slight decline in the performance of post-forbearance loan workouts, but the results were relatively strong with 75% of homeowners making their payments in accordance with the workout terms.”