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. Total Mortgages in Forbearance Down to 2.89
Per the latest MBA data, the total number of mortgage loans still in forbearance decreased by 7 basis points from 2.96% last week down to 2.89% (as of September 26, 2021).
This means roughly 1.4 million borrowers are still in forbearance. The good news, though, is that total mortgage volume continues to decline (as predicted) without being offset by new forbearance requests.
As Mike Fratantoni, Senior Vice President and Chief Economist at the MBA, explained:
While 1.4 million homeowners remained in forbearance as of September 26th, this number is expected to drop sharply over the next few weeks as many are reaching the 18-month expiration point of their forbearance terms.
2. Borrowers Resuming Monthly Payments
Borrowers appear to be exiting in an orderly fashion and the latest MBA data shows that of the cumulative forbearance exits for the period from June 1, 2020, through September 26, 2021, at the time of forbearance exit, 28.9% resulted in a loan deferral/partial claim and 21.7% represented borrowers who continued to make their monthly payments during their forbearance period.
These trends are definitely a positive sign and suggest that things are slowly returning to “normal”.
3. Borrowers Exiting Without Exit Plan Drops Below 5%
The amount of borrowers exiting without a loss mitigation plan in place has decreased to just 4.49% per the latest MBA data.
In addition, the MBA’s weekly servicer call center survey also shows progress, with average answer speed down from 1.7 minutes last week to 1.5 minutes this week, indicating that less borrowers are calling in need of help. Both of these trends are fantastic to see as it suggests servicer outreach efforts are working.
4. Re-entries Continue to Climb
On the negative side, forbearance re-entry numbers continue to creep back up. 12.4% of total loans in forbearance are in the initial forbearance plan stage, while 78.7% are in extension, and the remaining 8.9% are re-entries which means roughly 124,740 borrowers still in forbearance are re-entries.
This trend concerns me and shows that we’re not out of the woods yet when it comes to complete recovery from the COVID-19 pandemic.
The Bottom Line
Servicers have been all hands on deck over the past few months, and it doesn’t look like that will change anytime soon, even with the Sept. 30th deadline behind us. While we’re excited to see the continuing decrease in total forbearance volume, there’s still a lot of work to be done. I’m glad to see that the number of borrowers exiting without a loss mit plan continues to decline week-over-week, however, a large number of borrowers still need help to get out of forbearance safely.
Sagent’s loss mitigation and consumer platforms are here to help you continue to revamp borrower outreach methods and help forborne borrowers exit safely. As always, I’m on call to answer your policy questions and talk shop about how to help you care for borrowers as we continue to push towards the return to normalcy.