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Share of Mortgage Loans in Forbearance Decreases to 1.18 Percent in February

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Share of Mortgage Loans in Forbearance Decreases to 1.18 Percent in February

WASHINGTON, D.C. (March 21, 2022) – The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance decreased by 12 basis points from 1.30% of servicers’ portfolio volume in the prior month to 1.18% as of February 28, 2022. According to MBA’s estimate, 590,000 homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 8 basis points to 0.56%. Ginnie Mae loans in forbearance decreased 10 basis points to 1.50%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 30 basis points to 2.72%.

“There were many positive results in overall mortgage performance in February. The percentage of borrowers in forbearance declined for the 21st consecutive month, and the percentage of borrowers current on their mortgage payments increased to almost 95 percent – 350 basis points higher than one year ago. Finally, the percentage of borrowers with existing loan workouts who were current on their mortgage payments improved for the first time since June 2021,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “These three results – the lower forbearance rates and higher performance rates for both total borrowers and borrowers in workouts – are especially favorable given that there is typically a dip in mortgage performance in February because of the shortened number of days to make a payment.”

Added Walsh, “We can credit several factors to the improved performance, including the availability of viable loss mitigation options, low unemployment that is now below 4.0 percent, strong wage growth, and rising home equity.”

Key findings of MBA’s Loan Monitoring Survey – February 1 to February 28, 2022:

  • Total loans in forbearance decreased by 12 basis points in February 2022 relative to January 2022: from 1.30% to 1.18%.
    • By investor type, the share of Ginnie Mae loans in forbearance decreased relative to the prior month: from 1.60% to 1.50%.
    • The share of Fannie Mae and Freddie Mac loans in forbearance decreased relative to the prior month: from 0.64% to 0.56%.
    • The share of other loans (e.g., portfolio and PLS loans) in forbearance decreased relative to the prior month: from 3.02% to 2.72%.
  • Loans in forbearance as a share of servicing portfolio volume (#) as of February 28, 2022:
    • Total: 1.18% (previous month: 1.30%)
    •  Independent Mortgage Banks (IMBs): 1.44% (previous month: 1.59%)
    • Depositories: 0.97% (previous month: 1.06%)
  • By stage, 30.1% of total loans in forbearance are in the initial forbearance plan stage, while 57.0% are in a forbearance extension. The remaining 12.9% are forbearance re-entries, including re-entries with extensions.
  • Of the cumulative forbearance exits for the period from June 1, 2020, through February 28, 2022, at the time of forbearance exit:
    • 29.2% resulted in a loan deferral/partial claim.
    • 19.1% represented borrowers who continued to make their monthly payments during their forbearance period.
    • 17.0% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.
    • 15.2% resulted in a loan modification or trial loan modification.
    • 11.5% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance.
    • 6.8% resulted in loans paid off through either a refinance or by selling the home.
    • The remaining 1.2% resulted in repayment plans, short sales, deed-in-lieus or other reasons.
  • Total loans serviced that were current (not delinquent or in foreclosure) as a percent of servicing portfolio volume (#) rose to 94.94% in February 2022 from 94.91% in January 2022 (on a non-seasonally adjusted basis).
    • The five states with the highest share of loans that were current as a percent of servicing portfolio: Idaho, Washington, Colorado, Utah, and Oregon.
    • The five states with the lowest share of loans that were current as a percent of servicing portfolio: Louisiana, Mississippi, New York, Indiana, and Oklahoma.
  • Total completed loan workouts from 2020 and onward (repayment plans, loan deferrals/partial claims, loan modifications) that were current as a percent of total completed workouts rose to 82.78% last month from 82.26% in January.

MBA’s monthly Loan Monitoring Survey (replaces MBA’s Weekly Forbearance and Call Volume Survey) covers the period from February 1 through February 28, 2022, and represents 73% of the first-mortgage servicing market (36.4 million loans). To subscribe to the full report, go to www.mba.org/loanmonitoring.

NOTES: The next publication of the Monthly Loan Monitoring Survey (LMS) will be released on Monday, April 18, 2022, at 4:00 p.m. ET. For more detailed information on performance metrics, including seasonally adjusted delinquency rates by stage (30 days, 60 days, 90+ days), please refer to MBA’s Quarterly National Delinquency Survey at www.mba.org/nds.

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