Forbearance rate hits seven-month low

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Following a week of near-stasis, the number of mortgages in coronavirus-related forbearance continued its descent. The forbearance rate decreased 7 basis points between Oct. 19 and 25, according to the Mortgage Bankers Association.

Home loans in forbearance plans represent 5.83% — about 2.9 million homeowners — of all outstanding mortgages, down from 5.9% compared to the week before. It marks the lowest point since the share stood at 3.74% for the week ending Apr. 5.

The share of forborne loans at independent mortgage bank servicers fell to 6.27% from 6.35%, while depositories held at 5.86%.

“Almost half of forbearance exits to date have been from borrowers who remained current while in forbearance, or who were reinstated by paying back past-due amounts,” Mike Fratantoni, the MBA’s senior vice president and chief economist, said in a press release. “The share of loans in forbearance has returned to levels last seen in early April, but it still remains remarkably high. Further improvement will require ongoing recovery in the job market, as well as additional fiscal stimulus.”

Forbearances fell at every loan type.

The share of conforming mortgages — those purchased by Fannie Mae and Freddie Mac — decreased for the 21stweek in a row to 3.66% from 3.72%. Ginnie Mae loans — Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture Rural Housing Service products — dropped to 8.13% from 8.17%. Private-label securities and portfolio loans in forbearance — products not addressed by the coronavirus relief act — fell to 8.82% from 8.9%.

A 23.95% share of all forborne mortgages sit in the initial forbearance stage while 74.49% shifted to extended plans and the remaining 1.56% re-entered forbearance after exiting previously.

Forbearance requests as a percentage of servicing portfolio volume continued fluttering, inching back down to 0.1% from 0.11%. Call center volume as a percentage of portfolio volume dropped to 6.7% from 8.9%.

The MBA’s sample for this week's survey includes a total of 50 servicers with 26 independent mortgage bankers and 22 depositories. The sample also included two subservicers. By unit count, the respondents represented about 75%, or 37.3 million, of outstanding first-lien mortgages.

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Loss mitigation Distressed Mortgage Bankers Association Coronavirus CARES Act Fannie Mae Freddie Mac Ginnie Mae FHA