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 Will Soon Drop Below 3%
The latest MBA forbearance data shows that the total number of loans now in forbearance decreased by 8 basis points from 3.08% of servicers’ portfolio volume in the prior week to 3.00% as of September 12, 2021.
And while this number is likely going to dip below 3% in the next week or so, there are still 1.5 million borrowers in forbearance.
2. Mild but Consistent Decreases in Forbearance Volume Suggests Forbearance Exits Are Accelerating
A drop of .08% in total forbearance volume isn’t massive by any means, but it’s still meaningful to see a decrease of this size. It’s nowhere near the biggest drop we’ve seen in recent weeks, but it is not the smallest either. This is likely due to an acceleration in forbearance exits.
At this point, borrowers in forbearance extensions are exiting at a faster rate as they near – or reach – the expiration of their maximum forbearance term. Of the mortgage loans still in forbearance, 11.3% of total loans in forbearance are still in the initial forbearance plan stage, while 80.2% are in a forbearance extension. The remaining 8.5% are forbearance re-entries. This is the trend we were hoping to see approaching the end of the month.
3. Exits via Payment Deferrals & Loan Mod Are on the Rise
Per the MBA’s latest data, 60% of borrowers exiting forbearance are taking advantage of payment deferrals and loan modifications to facilitate their exits. These deferrals or modifications may involve a reduction in the interest rate, an extension of the length of time for repayment, and/or a different type of loan or loans. This number is uplifting to see, as it indicates a majority of borrowers are using recent changes to their advantage and making monthly payments more affordable to help keep them in their homes.
4. Nearly 20% Still Exiting Without a Loss Mit Plan
Despite the rise in exits via payment deferrals/loan mods, we’re still seeing roughly 20% of borrowers exiting forbearance exiting without a loss mit plan in place. Servicers should be stepping up their outreach efforts to these borrowers, as the September 30th deadline is less than two weeks away.
The Bottom Line
As predicted, September has been taxing for servicers. As forbearance exit numbers continue to climb, the pressure on servicers will continue to grow as well. With a significant number of borrowers still exiting forbearance without a plan, your tech is more important than ever in helping your team keep these struggling borrowers in their homes.
Sagent’s loss mitigation and consumer platforms are here to help you expand your borrower outreach efforts and keep you in your customers’ corners through the final rounds of this long fight. As always, I’m on standby to answer your policy questions and talk about how to help you care for borrowers during this critical phase