Fannie Mae and Freddie Mac loans in forbearance dropped to just 1% for the first time since the beginning of the pandemic.

Forbearance Loan Volume Fell at Reduced Pace to 2.21% as of Mid-October

According to the Mortgage Bankers Association (MBA), the total number of loans in forbearance fell slightly by 7 basis points to 2.21% as of October 17.

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Specific Loan Categories

All categories of loans in forbearance decreased but forbearance loans backed by Fannie Mae and Freddie Mac declined the most…the GSE forbearance rate declined to 1% for the first time since the pandemic’s onslaught.

Loans backed by Ginnie Mae decreased -5 basis points to 2.72%

Private-label securities (PLS) declined with a dip of 13 basis points to 5.21%.  Independent mortgage bank loans in forbearance fell eight basis points to 2.49% and loans with depository servicers declined five basis points to 2.1%

The MBA estimates that 1.1M homeowners remained in active forbearance plans as of October 17.  Mike Fratantoni, the MBA’s senior vice-president and chief economist, is not at all concerned about a reduced pace of exits, “…as…many servicers process forbearance exits at the beginning of the month…it is not surprising to see the pace of exits slow again mid-month.”

Where Remaining Forbearance Loans “Sit” in Process

The MBA’s most recent survey indicated that 15.3% of total loans in forbearance were in the initial stage of forbearance while 74.8% were in a forbearance extension.  The remaining 9.9% were re-entries.

Fratantoni said, “The composition of loans in forbearance is evolving.  More than 25% of loans in forbearance are now made up of new forbearance requests and re-entries, while many other homeowners who have reached the end of 18-month terms are successfully exiting into deferrals or modifications.”

Additionally, MBA data indicated that 29.1% of exits ended up in a loan deferral or partial claim while 20.7% represented borrowers who continued to make their mortgage payments during the forbearance period.  There were, however, 16.7% of borrowers in forbearance who made no monthly mortgage payments nor did they have a loss mitigation plan.

Thanks to the Mortgage Bankers Association and HousingWire.



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