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 Down to 3.25%
This week in forbearance volume, we can again see the ebb and flow as more homeowners exit forbearance. Per the MBA’s weekly forbearance data through August 15, forbearance volume has decreased slightly from 3.26% to 3.25%. This works out to roughly 1.6M homeowners still in forbearance.
This past week follows a significant decrease in the week prior (14bps) which followed two weeks of smaller declines (7bps and 1bps respectively). This is reflective of the world we are in right now: the overall decline shows good news, although there are still some pockets of stress from new requests/re-entries that hold the number back.
2 . PLS Market on the Move
This past week, the private-label securities (PLS) market was the main culprit. The forbearance share for portfolio loans and private-label securities increased 10 basis points to 7.15%.
As MBA Chief Economist and Senior Vice President Mike Fratantoni explained, “There were more new forbearance requests and re-entries for portfolio and PLS loans, leading to a 10-basis-point increase in their share.”
Fratantoni continued, “Portfolio and PLS loans now account for almost 50 percent of all depository servicer loans in forbearance and almost 40 percent of IMB servicer loans in forbearance, which highlights the importance of this investor category.”
This is significant for a number of reasons, not the least of which is the fact that this market is poised to come back given the GSE mandates to reduce footprint in certain markets.
3. 18mo Forbearance Expirations to Begin
Over the next few weeks, we should start to see the forbearance numbers move down as the 18-month forbearance period comes to a close. While many have targeted September 30 for this end date, some servicers retro-dated the start of forbearance to March 1, 2020. This means that August 31 would be the actual start of 18-mo forbearance expirations.
4. Loss Mit Safeguards Begin on 8/31
August 31 is also the start of the special loss mitigation safeguards implemented by the CFPB’s new Reg X rule which prevents foreclosure movement except in certain cases (abandoned properties, unresponsive borrowers, or sustained delinquency after completing a full loss mitigation evaluation).
The Bottom Line
The last four months of 2021 will be squarely focused on loss mitigation as servicers look to help borrowers in COVID-19 accommodations stay in their homes. As homeowners exit forbearance in droves over the next few months, efficiency, precision, and compliance are imperative for servicers. To learn how Sagent’s default management and loss mitigation platform, Tempo, helps servicers automate agency/nonagency decisioning to keep the loss mitigation process moving, fill out the form below.