Forbearance numbers decrease, with protections set to expire

Mortgages in COVID-19 forbearance plans decreased only slightly between August 9 and 15, according to the latest data from the Mortgage Bankers Association, but the numbers still continued a streak of weekly drops dating back to March.

The share of COVID-related forbearances came in at 3.25% of total outstanding mortgage volume — accounting for approximately 1.6 million borrowers — according to the MBA’s Weekly Forbearance and Call Volume Survey. The week’s share came in one basis point lower from 3.26% recorded the prior week. Among independent mortgage banks, or IMBs, forbearances made up 3.48% of volume, up two basis points on a weekly basis, while the percentage of forborne mortgages at depository banks decreased one basis point to 3.35%.

Both exits and entries showed limited activity, according to the MBA. “The share of loans in forbearance was little changed, as both new requests and exits were at a slower pace compared to the prior week. In fact, exits were at their slowest pace in over a year,” said Mike Fratantoni, MBA’s senior vice president and chief economist, in a press statement.

Forbearances among Ginnie Mae loans, consisting of mortgages taken through government-backed programs, dropped three basis points from 3.95% to 3.92% of weekly share. Conventional mortgages held by Fannie Mae and Freddie Mac saw the percentage in forbearance also fall three basis points, from 1.69% the prior week to 1.66%.

While forborne loans backed by Ginnie Mae or GSEs both accounted for a smaller percentage within their investor categories relative to one week earlier, the number of private-label securities and portfolio loans in forbearance jumped 10 basis points to 7.15% of total volume, up from 7.05% the previous week. The CARES Act did not offer any COVID-related protections for PLS and portfolio loans.

“Portfolio and PLS loans now account for almost 50% of all depository servicer loans in forbearance and almost 40% of IMB servicer loans in forbearance, which highlights the importance of this investor category,” Fratantoni said.

The number of forbearances currently in extensions accounted for 82.3% of their total volume. Forborne homeowners in the initial stage of their plans made up 10%, while forbearance re-entries equaled 7.7%.

Many distressed homeowners who entered forbearance in the first weeks of the 2020 pandemic shutdown will begin dropping out of their COVID-related protection plans in the coming weeks. Borrowers were initially eligible for six months of relief, with the option of two six-month extensions, for a total of 18 months, during which time no loan payments would be due. September is the first month when a large number of COVID-related protections will end.

The share of forbearance requests in the total weekly servicing volume edged down slightly compared to the previously weekly reporting period — from 0.06% to 0.05%. The call-center volume share of the servicing portfolio also decreased, down to 7.3% from 7.5% the prior week.

Of the 36.9 million mortgages currently being serviced, 25% are Ginnie Mae loans, with 56.4% backed by either Fannie Mae or Freddie Mac. The remaining 18.59% share belongs to the PLS/portfolio segment.