The share of mortgage loans in forbearance plans fell to 8.48% last week from 8.55% the week prior, according to the Mortgage Bankers Association’s Forbearance and Call Volume survey. This marks the first time the total number of loans in forbearance decreased since the survey’s inception in March.
The MBA approximates 4.2 million homeowners are now in forbearance, a decline from the almost 4.3 million estimated the prior week.
Broken down by investor type, Ginnie Mae mortgages – primarily backed by the Federal Housing Administration and the Veterans Administration – had the largest overall share of loans in forbearance at 11.83% for the third week in a row, the MBA reported.
The share of Fannie Mae and Freddie Mac loans in forbearance fell from 6.38% to 6.31%. Looking at private-label mortgage-backed securities and portfolio loans, the forbearance share fell to 9.99% from 10.18%, the report said.
The percentage of loans in forbearance for depository servicers and for independent mortgage bank servicers also both fell to 9.15% and 8.40%, respectively.
Declines in GSE, portfolio and PLS loans led to a lower share of loans in forbearance as more borrowers exited than entered a new forbearance plan, said Mike Fratantoni, MBA’s senior vice president and chief economist.
“Fewer homeowners in forbearance underscores the continued improvements in the job market, and provides another sign of the fundamental health of the housing market,” Fratantoni said.
Prior to COVID-19 shutting down the U.S. economy, the MBA reported the overall forbearance rate was 0.25%.
“The big unknown with respect to this positive development is the extent to which it relies upon policy measures put in place to help families through this crisis,” Fratantoni said. “Particularly the stimulus payments and enhanced unemployment insurance benefits that were key parts of the CARES Act.”
To learn more about the CARES Act, and stay up to date on all the latest news and information on forbearance, check out HousingWire’s newest forbearance resource here.
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