As the mortgage industry moves closer to the end of new COVID-related forbearances, the number of homeowners in forbearance decreased last month, according to the Mortgage Bankers Association.

In its monthly Loan Monitoring Survey released yesterday, the MBA found that the total number of loans now in forbearance decreased by 6 basis points from December to 0.64 percent in January. The MBA estimates that 320,000 homeowners are in forbearance plans.

Before January’s decline, the monthly forbearance rate had remained at 0.70 percent since October.

“The forbearance rate decreased across all investor types in January, as borrowers continued to recover from pandemic-related hardships,” Marina Walsh, MBA’s vice president of industry analysis, said in a statement. “With the national emergency set to end on May 11 of this year, many borrowers will no longer have the option to initiate COVID-19-related forbearance. Mortgage forbearance in other forms – whether due to natural disasters or life events – will continue, albeit with different requirements and parameters.”

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 1 basis point to 0.30 percent. Ginnie Mae loans in forbearance decreased 8 basis points to 1.37 percent, while the forbearance share for portfolio loans and private-label securities declined 17 basis points to 0.83 percent.

The percent of borrowers current on their mortgage – not delinquent or in foreclosure – was 95.86 percent in January compared to 95.69 percent in December.

For depository institutions, 0.42 percent of their loan portfolio was in forbearance compared to 0.44 percent in December, while 0.86 percent of independent mortgage banks’ portfolios was in forbearance compared to 0.97 percent in December.

The MBA said that 36.9 percent of total loans in forbearance were in the initial forbearance plan stage in January compared to 37.9 percent in December. The remaining loans include 49.9 percent that were in a forbearance extension and 13.2 percent that were forbearance re-entries, including re-entries with extensions.

MBA: Loan Forbearances Start to Decline Again

by Banker & Tradesman time to read: 1 min