The total number of loans now in forbearance decreased by 4 basis points, from 0.64% in January to 0.6% in February, as stated in a new report from the Mortgage Bankers Association (MBA).
According to the MBA’s latest monthly Loan Monitoring Survey, 300,000 homeowners are in forbearance plans. The share of Fannie Mae and Freddie Mac loans in forbearance decreased 2 basis points to 0.28%. Ginnie Mae loans in forbearance decreased 9 basis points to 1.28%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased 5 basis points to 0.78%.
Key highlights:
- By stage, 34.9% of total loans in forbearance are in the initial forbearance plan stage, while 51.8% are in a forbearance extension. The remaining 13.3% are forbearance re-entries, including re-entries with extensions.
- For forbearance exits from June 1, 2020, through February 2023, 29.6% resulted in a loan deferral/partial claim, 18% continued to make their monthly payments, 17.6% did not make all of their monthly payments and exited without a loss mitigation plan in place, 16.1% resulted in a loan modification or trial loan modification, 10.9% were in reinstatements, 6.6% had loans paid off through either a refinance or by selling the home, and 1.2% had repayment plans, short sales, deed-in-lieus or other reasons.
- Total loans serviced that were current (not delinquent or in foreclosure) as a percent of servicing portfolio volume decreased from 95.86% in January to 95.76%.
- The five states with the highest share of loans that were current as a percent of servicing portfolio were Washington, Idaho, Colorado, California, and Oregon.
- The five states with the lowest share of loans that were current as a percent of servicing portfolio were Louisiana, Mississippi, Indiana, New York, and West Virginia.
- Total completed loan workouts from 2020 and onward (repayment plans, loan deferrals/partial claims, loan modifications) that were current as a percent of total completed workouts increased from 76.03% in January to 76%.
Major takeaway:
“The forbearance rate decreased for both independent mortgage bank and depository servicers across all investor types in February,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “Even with the fewer days in the month – which often causes a drop in timely monthly payments–overall servicing portfolio performance declined only slightly to 95.8%, while performance of post-forbearance workouts stayed essentially flat at 76.0%.”
Added Walsh, “The February results on mortgage performance is welcome news, given recent increases in delinquencies for other credit types such as credit cards and auto loans. However, with the possibility of a recession this year, we may see some deterioration in performance – particularly for government loans.”
For the full report, visit www.mba.org/loanmonitoring.
