Servicers’ forbearance portfolio volumes decreased again last week, falling two basis points to 4.16%, according to a survey from the Mortgage Bankers Association.
Despite May 30 marking the 14th consecutive week of overall declines, a nearly equal number of forbearance exits and re-entries have left forbearance portfolio volumes essentially unaltered.
Broken down by investor types, the share of Fannie Mae and Freddie Mac loans in forbearance decreased one basis point to 2.18%, while Ginnie Mae loans in forbearance also dropped one basis point to 5.54%. The forbearance share for portfolio loans and private-label securities (PLS) witnessed the greatest decline by six basis points, to 8.31%.
According to Mike Fratantoni, MBA’s senior vice president and chief economist, forbearance exits dropped to six basis points, the lowest weekly level since mid-February, however, new forbearance requests, at four basis points, matched the recent weekly low from early May.
Last week’s numbers aren’t unexpected – most expiring plans are typically removed the first week of the month, and forbearance volume hasn’t seen a large drop since fall 2020. A similar rise in restart activity occurred following a spike in exits in early October, when the first wave of forbearance entrants reached their six-month mark, according to a recent report from data analytics giant Black Knight.
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According to the report, 830,000 plans are currently slated for review for extension or removal in June, the final quarterly review before early forbearance entrants begin to reach their 18-month plan expirations later this year.
As of mid-March, there were 1.45 million active plans that – based on their start date – would have been scheduled to reach their 18-month expirations in late 2021, and given recent improvements, 1.1 million such forbearance plans remain that – without any additional early exit activity – would reach their terminal expirations later this year, Black Knight said.
However, with all the exits and re-entries, the MBA estimated 2.1 million homeowners are still in some form of forbearance, with that number going unchanged for the third week in a row.
“Although the headline employment growth number for May was lower than many had anticipated, other data show evidence of a strengthening job market,” said Fratantoni. “That is good news for homeowners who have been struggling and are looking for work, as more families can regain their incomes and start making their mortgage payments again.”
