Why Are So Many Borrowers Exiting Forbearance without a Loss Mit Plan? 

Welcome to Sagent’s weekly homeowner hardship briefing where we analyze the latest market data, including the Mortgage Bankers Association’s forbearance data, to offer key takeaways for servicers.

Here’s what’s new this week:

1. Forbearance Volume Falls 7 Basis Points

All things considered, this week’s forbearance numbers are a net positive with a 7 basis point drop in forbearance volume per the MBA’s forbearance data through August 1.

We also saw a reduction in new forbearance requests and steady forbearance exit numbers (hence the 7 bps drop).

2. Forbearance Re-entries Still on the Rise

We are once again seeing a week-over-week rise in forbearance re-entries, up to 7.39% from 7.23% last week. According to my rough math, that works out to about 125,800 forbearance re-entries this week. We keep seeing increases in re-entry rates and I can’t help but wonder if this can be attributed to the impact of the Delta variant as it continues to ripple throughout the country. 

3. Worrisome Number of Borrowers Exiting Forbearance without a Loss Mit Plan

Another potentially problematic forbearance metric to keep an eye on is the number of borrowers exiting forbearance without a plan in place. According to the MBA, 15.7% of borrowers who exited forbearance since June 1 have exited without a loss mitigation plan in place.

To clarify, that means 15.7% of borrowers who have exited forbearance since June 1 have let their forbearances expire without any definitive plan in place to help them get their mortgage back to performing. 

The Bottom Line

With the latest announcement from the CFPB, servicers are under unprecedented scrutiny, and the rising number of forbearance re-entries and borrowers exiting forbearance without a loss mit plan in place are bound to attract regulator attention.

Servicers have to be hypervigilant about borrower outreach and ensure they’re leveraging the strength of their tech to help struggling borrowers understand what their options are. 

For tips on how to use your tech to improve borrower outreach and educate forborne borrowers about their options,  check out this blog post or fill out the form below to get personalized advice from industry experts.