Mortgage forbearance growth rate comes to near halt: MBA

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Growth in the coronavirus-related mortgage forbearance rate was nearly flat, increasing 2 basis points between June 1 and June 7, according to the Mortgage Bankers Association.

"This increase was primarily driven by a larger share of portfolio and PLS loans in forbearance. Half of the servicers in our sample saw the forbearance share decline for at least one investor category," Mike Fratantoni, the MBA's senior vice president and chief economist, said in a press release. "Although there continues to be layoffs, the job market does appear to be improving, and this is likely leading to many borrowers in forbearance deciding to opt out of their plan."

About 8.55% of all outstanding loans or approximately 4.3 million mortgages sat in forbearance plans as of the first week of June, compared to 8.53% and just nearly 4.3 million the week prior.

The share of loans in forbearance at independent mortgage bank servicers increased to 8.43% from 8.39% over that period. After the share of forborne mortgages at depositories dipped the week before, they rose again, going to 9.24% from 9.18%.

The good news is that the share of conforming mortgages — those purchased by Fannie Mae and Freddie Mac — in forbearance actually decreased, falling to 6.38% from 6.4%. But it didn't offset a rise in the share of forbearance of private-label securities and portfolio loans — products which were not addressed by the coronavirus relief act — to 10.18% from 10.03% one week earlier.

Ginnie Mae mortgages — Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture Rural Housing Service products — remained the highest percentage of loans in forbearance by investor type, but stayed static at 11.83%.

However, "with June mortgage payments due, servicers did report the first increase in forbearance requests in two months. The level of forbearance requests is still quite low, but there was a noticeable increase in call volume over the course of the week," Fratantoni said.

Forbearance requests as a percentage of servicing portfolio volume rose to 0.19% on June 7 from 0.17% on May 31. Call center volume as a percentage of portfolio volume shot to 8% from 6.7%.

The MBA's sample for this week's survey includes a total of 53 servicers including 28 independent mortgage bankers and 23 depositories. Two subservicers also were part of the sample. By unit count, the respondents represented nearly 76%, or 38.2 million, of outstanding first-lien mortgages.

Although not a direct comparison. Black Knight's estimates go through June 9 and extrapolated 4.66 million borrowers — or 8.8% of mortgages — in active forbearance plans. This total declined from 8.9% from the week prior.

Based on this estimate, monthly principal and interest advances on active forbearance plans across all investor types total $5.7 billion per month. GSEs face a projected $2.2 billion per month, $2.1 billion for private-label mortgage-backed securities and $1.3 billion for FHA and VA loans.

Tax and insurance payment advances total an additional $2.1 billion for servicers per month; including about $900 million for Fannie Mae and Freddie Mac loans, $700 million for private-label and portfolio loans, and $600 million for government loans.

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Loss mitigation Distressed Coronavirus Mortgage Bankers Association Fannie Mae Freddie Mac Ginnie Mae MSR Black Knight FHA