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The pace of mortgages coming out of forbearance remained slow in January, while new forbearance requests and re-entries increased, 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 11 basis points from 1.41 percent of servicers’ portfolio volume in December to 1.30 percent in January. The MBA estimates that 650,000 homeowners are in forbearance plans, down from an estimated 705,000 at the end of December.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 4 basis points in January to 0.68 percent. Ginnie Mae loans in forbearance decreased 3 basis points to 1.60 percent, and the forbearance share for portfolio loans and private-label securities (PLS) declined 41 basis points to 3.02 percent.

Marina Walsh, the MBA’s vice president of industry analysis, said in a statement that January had the smallest decline in forbearance exits during the past year.

“For the second straight month, the pace of forbearance exits reached another low since MBA began tracking exits in June 2020,” Walsh said. “There was also a pick-up in new forbearance requests and re-entries for all loans, and particularly for Ginnie Mae loans. Even though the forbearance rate continued its downward trajectory, it was the smallest monthly decline since January 2021.”

Walsh did point to positive news, noting that the percentage of borrowers who were current on their mortgage payments in January increased from the previous month. Current loans are those that are not delinquent or in foreclosure.

“However, there was some deterioration in the performance of borrowers with existing loan workouts,” Walsh added. “Borrowers in loan workouts may have experienced new life events unrelated to the pandemic, or alternatively, the omicron variant may have triggered or re-triggered employment, health, or other stresses.”

The MBA said 26.8 percent of total loans in forbearance are in the initial forbearance plan stage, while 59.5 percent are in a forbearance extension. The remaining 13.7 percent are forbearance re-entries, including re-entries with extensions.

MBA: Pace of Forbearance Exits Slows

by Banker & Tradesman time to read: 1 min