Servicers’ total number of loans in forbearance fell a whopping 24 basis points to 4.66% of portfolio volume during the first full week of April, according to a survey from the Mortgage Bankers Association – one of the biggest drops in the history of the series.
Ginnie Mae loans in particular dipped a massive 45 bps to 6.33% while Fannie Mae and Freddie Mac’s forbearance share shrunk even smaller last week, down to 2.52% – a 20 bps improvement. Portfolio loans and private-label securities (PLS) also dropped 15 bps to 8.65%.
After double-digit declines across every investor type, the MBA now estimates 2.3 million homeowners are in some form of forbearance. That’s down from 2.5 million the week before with overall forbearance exits increasing to their fastest pace since early November.
“Almost 32% of borrowers in forbearance extensions have now exceeded the 12-month mark,” said Mike Fratantoni, MBA’s senior vice president and chief economist. “In terms of performance, more than 88% of homeowners who have exited into deferral plans, modifications, or repayment plans were current on their loans at the end of March, compared to 92% of all homeowners.”
According to Fratantoni, the accelerating economic recovery in March helped more homeowners recover and
become current on their mortgages, in addition to helping other homeowners with more stable financial situations exit forbearance.
From forbearance to post-forbearance: How to make the process effective
To accommodate the large volume of loans still in forbearance, mortgage servicers must have functional, flexible and effective forbearance processes in place. Here are some actionable steps to create that process.
Presented by: FICS
There are some deviations, however, in the week prior that should be noted, including a 2.6% jump in forbearance re-entries. April, May, and June marked the height of the pandemic’s forbearance volume, so there is a greater likelihood in the coming months that re-entries will rise as borrowers hit their 12-month expiration and miss the date to extend.
Of the cumulative forbearance exits for the period from June 1, 2020, through April 4, 2021, 26% represented borrowers who continued to make their monthly payments during their forbearance period. This number has been inversely dropping for months against a rising percentage of borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet. As of last week, that number is up to 14.4%.
While servicers work to help borrowers in and out of forbearance, Robert Broeksmit, the MBA’s current president and CEO, said that the CFPB’s own 2020 consumer response report demonstrates how well servicers have done in helping borrowers in forbearance. While overall, consumer complaints to the CFPB were up 54% year-over-year, complaints against mortgage companies were up just 7.5%, and complaints against mortgage servicers were actually down, by 3.5%.
“We have a long and uneven road ahead of us, but the past has been insightful; no one wins when a loan fails,” Broeksmit said. “The ability for the industry and mortgage servicers to overcome the obstacles created by COVID-19 will depend on our ability to work together, listen and learn, and keep the best interests of the nation’s borrowers and lenders front and center.”
