Mortgage Forbearances Reduced by Half Since June 2020 Peak
Welcome to Sagent’s weekly homeowner hardship briefing where we bring you the latest forbearance and other data along with key insights and takeaways for servicers.
Here’s what you need to know this week about the most recent MBA forbearance data (through May 9):
1. Total Forbearance Volume Sees Another Significant Drop to 4.22%
According to the most recent data from the MBA, this week, we continue our week-over-week declines in forbearance volume with a significant drop to 4.22% with ~2.1 million homeowners currently in forbearance (see Figure 1).
This marks a milestone for forbearances which have now been reduced by half since the peak in June 2020 at 8.39%.
We are definitely trending toward reaching less than 2M borrowers in forbearance by September 2021.
It’s worth noting that this drop occurred in all loan categories (GSEs, Ginnie Mae, and PLS).
2. 83% of Borrowers Are in Forbearance Extensions, with 50% in Forbearance for 12+ Months
This week’s data shows that 83% of borrowers in forbearance are in an extension, and now over 50% have been in forbearance for more than 12 months.
This figure continues to be concerning for servicers, and one to keep an eye on.
3. 28% of Borrowers Exiting Forbearance Are Exiting without a Loss Mit Plan
This week, we are continuing to see this troubling trend of borrowers exiting forbearance without a loss mitigation plan in place. Twenty-eight percent of borrowers who exited forbearance exited without a plan.
The majority of those exiting forbearance are exiting via payment deferrals and loan modifications, accounting for about 50% of exits. We’re likely to continue to see this number increase as forbearances continue to mature and borrowers begin considering their exit strategies.
The Bottom Line
We’re seeing pretty consistent numbers in the MBA’s forbearance data week-over-week. Overall forbearances are declining, extensions and borrowers with forbearance older than 12 months are increasing, and exits via payment deferrals and loan modifications are climbing as more borrowers start looking into their loss mit options.