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Share of Mortgage Loans in Forbearance Decreases to 0.81% in June

July 18, 2022 Loan Monitoring Survey MBA Research Press Release Residential

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Adam DeSanctis

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The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance decreased by 4 basis points from 0.85% of servicers’ portfolio volume in the prior month to 0.81% as of June 30, 2022. According to MBA’s estimate, 405,000 homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 3 basis points to 0.35%. Ginnie Mae loans in forbearance increased 1 basis point to 1.26%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 18 basis points to 1.68%.

“The overall forbearance rate in June stayed relatively flat with just a 4-basis-point decline from May,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “Borrowers continue to exit forbearance, but at a much slower pace than six or nine months ago. New forbearance requests are still trickling in, as permitted under the CARES Act, resulting in very little movement in the overall percentage of loans in forbearance.”

Added Walsh, “There are some early indicators of borrower stress resulting from high inflation and rising interest rates, among other factors. For example, overall servicing portfolio performance dropped by 14 basis points to 95.71% current in June, and the performance of post-forbearance workouts declined by 140 basis points to 81.34%. It is worth monitoring post-forbearance workouts – particularly for borrowers with government loans, who are typically the most vulnerable to economic slowdowns.”

 


Key findings of MBA's Loan Monitoring Survey – June 1 to June 30, 2022:

    • Total loans in forbearance decreased by 4 basis points in June 2022 relative to May 2022: from 0.85% to 0.81%.
      • By investor type, the share of Ginnie Mae loans in forbearance increased relative to the prior month: from 1.25% to 1.26%.
      • The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior month: from 0.38% to 0.35%.
      • The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior month: from 1.86% to 1.68%.
    • Loans in forbearance as a share of servicing portfolio volume (#) as of June 30, 2022:
      • Total: 0.81% (previous month: 0.85%)
      • Independent Mortgage Banks (IMBs): 1.03% (previous month: 1.06%)
      • Depositories: 0.62% (previous month: 0.67%)
    • By stage, 29.8% of total loans in forbearance are in the initial forbearance plan stage, while 57.6% are in a forbearance extension. The remaining 12.6% are forbearance re-entries, including re-entries with extensions.
    • Of the cumulative forbearance exits for the period from June 1, 2020, through June 30, 2022, at the time of forbearance exit:
      • 29.4% resulted in a loan deferral/partial claim.
      • 18.5% represented borrowers who continued to make their monthly payments during their forbearance period.
      • 17.2% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
      • 15.8% resulted in a loan modification or trial loan modification.
      • 11.2% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
      • 6.7% resulted in loans paid off through either a refinance or by selling the home.
      • The remaining 1.2% resulted in 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 (#) dropped to 95.71% in June 2022 from 95.85% in May 2022 (on a non-seasonally adjusted basis).
      • The five states with the highest share of loans that were current as a percent of servicing portfolio: Idaho, Washington, Utah, Colorado, and Oregon.
      • The five states with the lowest share of loans that were current as a percent of servicing portfolio: Mississippi, Louisiana, New York, West Virginia, and Illinois.
    • 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 declined to 81.34% last month from 82.75% in May.

    MBA’s monthly Loan Monitoring Survey (replaced MBA’s Weekly Forbearance and Call Volume Survey in November 2021) covers the period from June 1 through June 30, 2022, and represents 72% of the first-mortgage servicing market (36.0 million loans). To subscribe to the full report, go to www.mba.org/loanmonitoring.

    NOTES: The next publication of the Monthly Loan Monitoring Survey (LMS) will be released on Monday, August 15, 2022, at 4:00 p.m. ET. For more detailed information on performance metrics, including seasonally adjusted delinquency rates by stage (30 days, 60 days, 90+ days), please refer to MBA’s Quarterly National Delinquency Survey at www.mba.org/nds.