Mortgage forbearance rate continues to decrease, but at a slower pace
The pace of mortgages going into forbearance shrunk for the sixth week in a row, though at reduced speed. Coronavirus-related forbearances fell 6 basis points between July 13 and July 19, according to the Mortgage Bankers Association.
About 7.74% — or nearly 3.9 million — of all outstanding loans sat in forbearance plans compared to 7.8% and about 3.9 million in the MBA's report the week prior. The share of forborne loans at independent mortgage bank servicers actually rose to 7.85% from 7.83%, while depositories declined to 8.06% from 8.23% over that same period.
"Although the GSE portfolio of loans in forbearance should continue to improve, Ginnie Mae's portfolio saw an uptick of both loans in forbearance and borrowers requesting forbearance," Mike Fratantoni, the MBA's senior vice president and chief economist, said in a press release. "The high level of unemployment claims in recent weeks may be playing a role, as weakness would likely impact Ginnie Mae’s portfolio first."
The forbearance share of conforming mortgages — those purchased by Fannie Mae and Freddie Mac — slid to 5.49% from 5.64%. Ginnie Mae loans — Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture Rural Housing Service products — inched up to 10.27% from 10.26%.
"As a result of large buyouts from Ginnie Mae pools in recent weeks, many FHA and VA loans are now being held as portfolio loans by bank servicers," Fratantoni said. "That is why the share of portfolio loans in forbearance has increased and is now typically at a higher level than that for Ginnie Mae loans."
Private-label securities and portfolio loans — products not addressed by the coronavirus relief act — continued playing hopscotch, this week rising to 10.53% from 10.41%.
Forbearance requests as a percentage of servicing portfolio volume remained at 0.13% for the third consecutive week, while call center volume as a percentage of portfolio volume increased again, going to 9% from 8.3%.
The MBA's sample for this week's survey has a total of 52 servicers including 27 independent mortgage bankers and 23 depositories. The sample also included two subservicers. By unit count, the respondents represented about 75%, or 37.3 million, of outstanding first-lien mortgages.