Following 10 consecutive weeks of mortgage loans in forbearance declines, the total number of loans in forbearance appears to have flattened out for now.
As of the week ending Aug. 23, 2020, the share of loans in forbearance was at 7.2 percent, the same number as the previous week, according to the Mortgage Bankers Association’s (MBA) latest Forbearance and Call Volume Survey.
There are now approximately 3.6 million homeowners enrolled in forbearance plans, according to MBA’s estimates.
Credit: MBA
Although the overall numbers seem to indicate stability at face value, Ginnie Mae portfolio and private-label securities (PLS) loans have actually shown increases in forbearance rates, indicating that high layoff rates and fewer unemployment benefits with the expiration of CARES Act benefits have impacted Federal Housing Administration (FHA) and U.S. Department of Veterans Affairs (VA) loan borrowers significantly.
Mike Fratantoni | Photo credit: Mortgage Bankers Association
“The share of loans in forbearance was unchanged, as the decline in the share of GSE loans was offset by increases for Ginnie Mae, and portfolio and PLS loans,” Mike Fratantoni, MBA’s senior vice president and chief economist, said in a statement. “The pace of new forbearance requests has been relatively flat across investor types, but for those with GSE loans, the rate of exits from forbearance regularly exceeds the rate of new requests.
“The exception in these trends are borrowers with Ginnie Mae loans,” Fratantoni added. “The loss of enhanced unemployment insurance benefits, coupled with a consistently high rate of layoffs and uncertainty about the job market, are having a disproportionate impact on FHA and VA borrowers.”
Ginnie Mae loans in forbearance increased week over week from 9.54 percent to 9.58 percent, while Fannie Mae and Freddie Mac loans in forbearance dropped from 4.93 percent the previous week to 4.88 percent.
The share of loans in forbearance for portfolio and PLS loans rose from 10.37 percent the week prior to 10.44 percent. Loans in forbearance for depository servicers rose slightly from 7.48 percent to 7.49 percent, and the share of loans in forbearance for independent mortgage bank (IMB) servicers declined from 7.43 percent to 7.41 percent.
Currently, 36.71 of total loans in forbearance are in the initial forbearance plan stage, 62.43 percent are in a forbearance extension and 0.86 percent are forbearance re-entries.