Forbearances drop to lowest level in a year, MBA finds

Economic stabilization drove one of the biggest mortgage recoveries on record, according to the Mortgage Bankers Association.

The number of mortgages in coronavirus-related forbearance fell for the sixth week in a row, dropping 24 basis points between March 29 and April 4.

Home loans in forbearance plans represent 4.66% — about 2.3 million homeowners — of all outstanding mortgages, down from 4.9% the week prior. It’s the lowest forbearance rate since exactly one year earlier when the share rose to 3.74% on April 5, 2020, the largest fall since July and one of the largest in the history of the series, according to the MBA’s SVP and chief economist, Mike Fratantoni.

The percentage of forborne loans at independent mortgage bank servicers dropped to 4.89% from 5.18% and depositories declined to 4.8% from 5.03%.

“Overall, forbearance exits increased to their fastest pace since early November,” Fratantoni said in a press release. “The accelerating economic recovery in March helped more homeowners recover and become current on their mortgages, in addition to helping other homeowners with more stable financial situations exit forbearance.”

Each investor category saw major declines in forborne mortgage share. Ginnie Mae loans — which are Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture Rural Housing Service products — plummeted 45 basis points to 6.33% from 6.78%.

Conforming mortgages — those purchased by Fannie Mae and Freddie Mac — continue to lead in the recovery, going to 2.52% from 2.72%. Meanwhile, private-label securities and portfolio loans — products not addressed by the coronavirus relief act — dropped to 8.65% from 8.8%.

A 13.2% share of all forborne mortgages sits in the initial forbearance stage, while 82% shifted to extended plans and the remaining 4.8% re-entered forbearance after exiting previously.

Forbearance requests as a percentage of servicing portfolio volume edged up slightly to 0.05% from 0.04% the week earlier. Call center volume as a percentage of portfolio volume increased to 8.5% from 8.1%.

The MBA's sample for this week's survey includes a total of 48 servicers with 25 independent mortgage bankers and 21 depositories. The sample also included two subservicers. By unit count, the respondents represented about 74%, or 36.9 million, of outstanding first-lien mortgages.