Ginnie Mae forbearance rate flattens
Suspended payments stabilized between Sept. 14 and Sept. 20 in one part of the mortgage market where they'd been rising, according to the Mortgage Bankers Association.
The forbearance rate for mortgages in Ginnie Mae securitizations, including those insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs, remained unchanged at 9.15%. However, concern about payment suspension activity in this part of the market persists.
"The recent uptick in forbearance requests, particularly for those with FHA or VA loans, is leaving the Ginnie Mae share elevated," Mike Fratantoni, the MBA's senior vice president and chief economist, said in a press release.
The overall share of loans in forbearance continued to decline in the MBA's latest survey, falling 6 basis points to 6.87% from 6.93% the previous week. The share of Fannie Mae and Freddie Mac loans with suspended payments also continued to fall, dropping 9 basis points to 4.46% from 4.55%.
Following a 19-basis-point drop the previous week, the share of loans in forbearance within the private market for portfolio loans and residential mortgage-backed securities held at 10.52%.
Under the terms of the CARES Act, borrowers with government-related loans can put their payments on pause for six months, with a one-time extension for another six months if needed. They must later repay the amount forborne.
Loans in forbearance tracked in the latest MBA survey broke down as follows: 68.37% were in extended plans, 30.26% were in the initial forbearance stage and the remaining 1.37% represented loans that re-entered forbearance after exiting it. That breakdown is very similar to that seen one week earlier.
Monthly amounts servicers are responsible for advancing to investors due to forbearance total $6 billion, according to estimates Black Knight extrapolated from its McDash Flash data set last Friday. That total breaks down into $4.4 billion in principal and interest, and $1.6 billion in taxes and insurance.
The industry obtained limited relief from its responsibility for servicing advances from government intervention, such as monetary policy stimulus that has fueled strong origination activity. But servicers remain concerned about having to temporarily cover payments borrowers aren't making.