Share of US Mortgage Loans in Forbearance Declines Further in December

According to the Mortgage Bankers Association’s (MBA) new monthly Loan Monitoring Survey (LMS) released on Tuesday (1-23-24), the total number of loans in forbearance as of December 31st, 2023, decreased 3 basis points to 0.23% of servicers’ portfolio volume—down from 0.26% in November. MBA estimates that 115,000 homeowners remain in forbearance plans. Mortgage servicers’ have provided forbearance to approximately 8.1 million borrowers since March 2020, MBA says.

In December, the share of Fannie Mae and Freddie Mac loans in forbearance declined 1 basis point to 0.15%; Ginnie Mae loans in forbearance decreased 8 basis points to 0.39%; and the forbearance share for portfolio loans and private-label securities (PLS) declined 3 basis points to 0.27%.

In remarks accompanying the December forbearance report, MBA Vice President of Industry Analysis Marina Walsh, CMB, said:

“Forbearance as a loss mitigation option is diminishing. While forbearance is a powerful tool for delinquency surges resulting from natural disasters or major disruptions such as a pandemic, today’s borrowers are not experiencing widespread financial distress. The overall performance of servicing portfolios—particularly government loans—declined in December. Factors such as seasonality, a changing labor market, resumption of student loan payments, and the rise in balances on other forms of consumer debt are likely at play.”

Walsh also noted that MBA anticipates that the unemployment rate, a leading indicator of mortgage performance, is expected to increase gradually from 3.7% at end of 2023 to 4.5% by the end of 2024.