The percentage of borrowers in forbearance fell for the 21st consecutive month in February, according to a monthly survey by the Mortgage Bankers Association (MBA).
The MBA’s monthly Loan Monitoring Survey found the number of loans in forbearance decreased 12 basis points in February from January, falling to 1.18% of servicers’ portfolio volume as of February 28, down from 1.3% a month earlier. The MBA estimated that 590,000 homeowners are in forbearance plans.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased 8 basis points in February to 0.56%, the MBA said, while Ginnie Mae loans in forbearance decreased 10 basis points to 1.50% and loans and private-label securities (PLS) in forbearance declined 30 basis points to 2.72%.
In addition to the decline in the share of borrowers in forbearance, “There were many positive results in overall mortgage performance in February,” said Marina Walsh, MBA’s vice president of industry analysis. “The percentage of borrowers current on their mortgage payments increased to almost 95% – 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.”
“These three results,” she continued, “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 the month has fewer days in which to make a payment.
Walsh added the improved performance can be credited to several factors, “including the availability of viable loss-mitigation options, low unemployment that is now below 4%, strong wage growth, and rising home equity.”
Other highlights of the survey for Feb. 1-28, 2022:
- Loans in forbearance as a share of servicing portfolio volume:
- Overall total: 1.18%, down from 1.3% in January.
- By investor type, the share of Ginnie Mae loans in forbearance decreased to 1.5% from 1.6% in January.
- Independent Mortgage Banks (IMBs): 1.44%, down from 1.59% in January.
- Depositories: 0.97%, down from 1.06% in January.
- By stage, 30.1% of total loans in forbearance are in the initial forbearance plan stage, while 57% 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% 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, and
- 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 from 94.91% in January (on a non-seasonally adjusted basis).
- The five states with the highest share of loans that were current as a percentage of servicing portfolio: Idaho, Washington, Colorado, Utah, and Oregon
- The five states with the lowest share of loans that were current as a percentage of servicing portfolio: Louisiana, Mississippi, New York, Indiana, and Oklahoma.
MBA said its monthly Loan Monitoring Survey replaces its Weekly Forbearance and Call Volume Survey, and represents 73% of the first-mortgage servicing market (36.4 million loans).
