After two weeks of slight increases, the U.S. forbearance rate, measuring the share of mortgages with suspended payments, remained unchanged from the week prior at 5.54%, according to the Mortgage Bankers Association. The MBA estimates there are still 2.8 million homeowners in some form of mortgage forbearance.
Fannie Mae and Freddie Mac loans in forbearance gained for the first time in 25 weeks on Dec. 1, however, they fell once again last week to 3.34% – a 2-basis-point improvement. The GSE’s forbearance rate overall has improved immensely, now down by more than 50% since its peak in late May.
Ginnie Mae loans, on the other hand, which include loans backed by the Federal Housing Administration, offset last week’s declines by rising 6 basis points to 7.89%. So far, the FHA’s active forbearance volumes have seen just half the GSEs’ level of improvement from their peaks.
Portfolio loans and private-label securities (PLS), as well as depository servicers also experienced basis point gains to 8.7% and 5.48%, respectively. The percentage of loans in forbearance for independent mortgage bank servicers fell 1 basis point from the previous week to 6.02%.
Mike Fratantoni, MBA’s senior vice president and chief economist, noted that while new forbearance requests declined this week, exits slowed to a new low for the series.
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“The job market data for November showed an economic recovery that was slowing in response to the latest surge in COVID-19 cases. It is not surprising to see the rate of forbearance exits slow, as households that needed forbearance assistance in October may be in even greater need now,” Fratantoni said.
And borrowers in need proved they are searching for it. The total number of loans in forbearance extensions gained to 77.9% as homeowners chose to take advantage of relief past the initial six-month term. The percentage of borrowers who sought forbearance re-entry also rose to 2.29% – a statistic Fratantoni had previously noted was concerning.
Those re-entries are also what mainly drove the first three weeks of November’s forbearance inflow up 15% from the same period in October, according to a recent report from Black Knight.
Now that the industry has entered into December, Black Knight estimates this month marks the next largest volume of expirations, with more than 1 million (39%) active plans currently set to expire – most of which are reaching their nine-month mark.
While forbearances continue to see widespread declines, based on the current rate of improvement there would still be nearly 2 million active plans at the end of March when the first wave reaches their 12-month expiration point, the Black Knight report said.
Although borrowers are showing the need for assistance, they may not be reaching out to their servicer for it. As a percent of servicing portfolio volume, the MBA report shows that weekly service center calls decreased from the previous week from 7.7% to 5.3% – a survey low.
The deadline for receiving support was extended last week and the cutoff for single-family homeowners to request forbearance now ends on Jan. 31, 2021, for loans backed by the Federal Housing Finance Agency. Those backed by the FHA still have a deadline of Dec. 31, 2020.
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