Forbearances remain flat for the first time in 10 weeks

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The rate of mortgages going into coronavirus-related forbearance flattened between Aug. 17 and Aug. 23, according to the Mortgage Bankers Association.

Following 10 weeks of declines dating back to June 7, the rate held at 7.2% from the week before — an estimated 3.6 million mortgages. In a reversal of last week, the share of forborne loans at independent mortgage bank servicers fell to 7.41% from 7.43%, while depositories inched up to 7.49% from 7.48% in that same time.

"The share of loans in forbearance was unchanged, as the decline in the share of GSE loans was offset by increases for Ginnie Mae, and portfolio and PLS loans. The pace of new forbearance requests has been relatively flat across investor types, but for those with GSE loans, the rate of exits from forbearance regularly exceeds the rate of new requests," Mike Fratantoni, the MBA's senior vice president and chief economist, said in a press release.

"The exception in these trends are borrowers with Ginnie Mae loans,” he wrote. “The loss of enhanced unemployment insurance benefits, coupled with a consistently high rate of layoffs and uncertainty about the job market, are having a disproportionate impact on FHA and VA borrowers."

The forbearance share of conforming mortgages — those purchased by Fannie Mae and Freddie Mac — fell to 4.88% from 4.93%. Ginnie Mae loans — Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture Rural Housing Service products — rose to 9.58% from 9.54%.

Private-label securities and portfolio loans — products not addressed by the coronavirus relief act — continued increasing, going to 10.44% from 10.37%.

Forbearance requests as a percentage of servicing portfolio volume held at 0.1% from 0.11%, while call center volume as a percentage of portfolio volume dropped to 7.2% from 8.7%.

While the movement in this week's survey came to a stalemate, uncertainty lies ahead. Last week, the Federal Housing Finance Agency extended its foreclosure moratorium to the end of 2020. Determining the best handling of the issue and its resolution remains extremely fluid — especially with the upcoming presidential election.

"Giving forbearance, writing people checks and putting in foreclosure moratoriums are relatively easy things to do. Managing how it plays out on the backend is going to be much more nuanced," Dan Sogorka, CEO of Sagent, said in an interview.

"A lot of that has to do with what's going on with the economy, the political spectrum and unemployment. The amount of money being thrown at this problem by the government is amazing, as are the policies. Above all that is COVID. Are we really coming out of it? Or do we have second and third waves and a crapshoot around vaccines? Underlying all of this is a growing backlog of people that normally would have been foreclosed on in a normal and reasonable fashion that are not being foreclosed."

The MBA's sample for this week's survey includes a total of 49 servicers with 26 independent mortgage bankers and 21 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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