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While the pace of monthly forbearance exits has slowed, the number of borrowers in forbearance continues to decline, according to the Mortgage Bankers Association.

In its monthly Loan Monitoring Survey released this week, the MBA found that the total number of loans now in forbearance decreased by 9 basis points from 0.94 percent of servicers’ portfolio volume in April to 0.85 percent in May. The MBA estimates that 425,000 homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 5 basis points to 0.38 percent. Ginnie Mae loans in forbearance decreased 4 basis points to 1.25 percent, and the forbearance share for portfolio loans and private-label securities (PLS) declined 29 basis points to 1.86 percent.

“Servicers are whittling away at the remaining loans in forbearance, even as the pace of monthly forbearance exits slowed in May to a new survey low,” Marina Walsh, MBA’s vice president of industry analysis, said in a statement. “Most borrowers exiting forbearance are moving into either a loan modification, payment deferral, or a combination of the two workout options.”

The MBA said that 28.2 percent of total loans in forbearance are in the initial forbearance plan stage, while 58.6 percent are in a forbearance extension. The remaining 13.2 percent are forbearance re-entries, including re-entries with extensions.

For depository institutions, 0.67 percent of their loan portfolio is in forbearance, down from 0.74 percent in April, while 1.06 percent of independent mortgage banks’ portfolios are in forbearance, down from 1.17 percent in April.

The percent of borrowers current on their mortgage – not delinquent or in foreclosure – increased by 21 basis point is June to 95.85 percent, which Walsh described as a positive sign.

“However, it is worth watching if the rapid increase in interest rates for all loans, combined with inflation that is outpacing wage growth, complicates post-forbearance workout options and puts additional pressure on borrowers in existing post-forbearance workouts,” Walsh added.

MBA: Mortgage Forbearances Continue to Decline

by Banker & Tradesman time to read: 1 min