Total servicer lenient loans dropped For the seventh week in a row, another 16 basis points fell to 4.5% of the portfolio’s volume last week Mortgage Bankers Association. After the massive decline the week before, the share of forbearance loans fell by a total of 40 basis points The last two weeks.
Portfolio loans and private label stocks made up the lion’s share of last week’s slump, after falling 31 basis points to 8.34%. Ginnie Mae Loans fell 17 basis points to 6.16%, while the share of Fannie Mae and Freddie Mac Forbearance was again the lowest percentage at 2.44% – an eight basis point improvement.
Interestingly, the number of forbearance exits on Fannie, Freddie, and Ginnie Mae loans fell last week – more than 36% of borrowers in forbearance extensions have now passed the 12-month mark. Borrowers who are supported by government agencies have the option to extend their forbearance up to 18 months thank you to continue legislation through the FHFA and FHA.
Unsupported borrowers by the federal government do not have all the same blanket guidelines. A number of these loans may be held in bank portfolios, where the bank has the discretion to offer relief as it deems most appropriate. Others are owned by smaller investors or are repackaged as PLS, again with the documentation in these loans being responsible for the type of relief a borrower can get.
Of the cumulative forbearance outcomes for the period June 1, 2020 through April 11, 2021, 25.6% were borrowers who continued to make their monthly payments during their forbearance period. That number has been down in reverse for months, versus an increasing percentage of borrowers who haven’t made all of their monthly payments and have given up on leniency with no loss mitigation plan in place. As of last week, that number is up to 14.6%.
Over the past three weeks, the percentage of borrowers who exit with a deferred loan / partial entitlement has increased over the borrowers who kept their payments up to date. That’s a big change – ever since the MBA started collecting these numbers, current borrowers have always had the highest percentage of exits.
The MBA defines loan deferral / repayment as payments that are not made by the borrower and that are postponed to the end of the loan term to be paid on sale, refinancing, or when the home comes due. In this way, the borrower can resume their regular monthly payments as before without having to make up for missed payments.
While this postponement of exits is relatively new, MBA senior vice president and chief economist Mike Fratantoni is confident that March economic data for housing and consumer spending forecast a strong real estate market and an accelerating pace of Economic activity.
“Combined with the support from homeowners and the stimulus payments that many households are receiving, we expect the forbearance numbers to continue to decline in the coming months as more individuals are present Regaining employment,Said Fratantoni. “Homeowners who are still facing difficulties and need to extend their grace period should contact their service technicians.”