The share of Fannie Mae and Freddie Mac loans in forbearance has reached the lowest level since the start of the pandemic, according to the Mortgage Bankers Association, but an increase in the number of borrowers exiting forbearance into loan modifications points to ongoing struggles in the recovery from the pandemic.

In the final weekly version of its Forbearance and Call Volume Survey, the MBA found that the total number of loans in forbearance decreased by 9 basis points from 2.15 percent of servicers’ portfolio volume in the prior week to 2.06 percent as of Oct. 31. The MBA estimates that 1 million homeowners remain in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 5 basis points to 0.92 percent, marking the second straight week that the share has dropped below 1 percent. The MBA said last week the share had remained above 1 percent since the start of the pandemic in March 2020.

Ginnie Mae loans in forbearance decreased 13 basis points to 2.52 percent, and the forbearance share for portfolio loans and private-label securities (PLS) declined 13 basis points to 5 percent. The percentage of loans in forbearance for independent mortgage bank (IMB) servicers decreased 15 basis points relative to the prior week to 2.28 percent, and the percentage of loans in forbearance for depository servicers decreased 5 basis points to 2.02 percent.

The MBA said 15.8 percent of total loans in forbearance are in the initial forbearance plan stage, while 73.9 percent are in a forbearance extension and 10.3 percent are forbearance re-entries, including re-entries with extensions.

“One million homeowners remained in forbearance as we reached the end of October, but the forbearance share continued to decline, with larger declines for portfolio and PLS loans,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement. “More borrowers who exited forbearance the last week of October went into modifications, a sign that they have not yet regained their pre-pandemic level of income.”

Fratantoni added that the strong job market report from October, which saw another drop in the unemployment rate and an increase in wage growth, was a positive sign for those homeowners “still struggling to get back on their feet.”

The MBA said it will no longer report weekly forbearance activity, reporting results instead on a monthly basis starting with November activity.

MBA: Forbearance Hits Lowest Level Yet

by Banker & Tradesman time to read: 1 min