Mortgage Forbearances Down to 2.21% But Exit Rates Are Slowing

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 Forbearance Volume Drops 7bps

Per the latest MBA data as of October 17th, the total number of loans now in forbearance decreased by 7 basis points from 2.28% of servicers’ portfolio volume in the prior week to 2.21% this week. While the exit pace is slowing down, this decline is still a positive sign showing servicers are working with borrowers to ensure they exit forbearance as safely as possible.

Total Mortgages in Forbearance (Source: Mortgage Bankers Association)

Roughly 1.1 million homeowners remain in forbearance plans almost one month after the September 30th deadline.

2. New Requests/Re-Entries Remain Low

The latest MBA data shows that 15.26% of total loans in forbearance are in the initial forbearance plan stage, while 74.82% are in a forbearance extension, and the remaining 9.92% are forbearance re-entries.

Forbearance Extensions and Re-entries (Source: Mortgage Bankers Association)

Forbearance extensions and re-entries remained low this week, a continuing trend that suggests overall positive economic trends across the board.

3. Deferrals/Partial Claims And Modifications accounted for 65% Of Exits

Of all the forbearance exits (from June 1, 2020, through October 17, 2021), at the time of forbearance exit, 29.1% of exits resulted in a loan deferral/partial claim, and another 20.7% of borrowers continued to make their monthly payments during their forbearance period. Additionally, the total number of borrowers exiting with no plan in place dropped by 6bps; another very positive trend for both servicers and borrowers.

The Bottom Line

Overall, we are seeing continued improvement in forbearance exits. While the week-to-week pace has slowed, I feel the smaller reduction in the exit population is largely attributable to the ebb and flow of borrowers based on timing given that few borrowers exit mid-month.

Mike Fratantoni, MBA Senior Vice President and Chief Economist, confirmed my assumption explaining:

Following two weeks of rapid declines, the share of loans in forbearance dropped again, but at a reduced rate. As reported in the past, many servicers process forbearance exits at the beginning of the month, therefore it is not surprising to see the pace of exits slow again mid-month.

Sagent’s loss mitigation and consumer platforms are here to strengthen borrower relationships and keep you united with your customers as we continue this uphill grind. 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.


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