Mortgage Forbearances Almost at Pre-Pandemic Levels as Two-Year Mark Approaches
Welcome to Sagent’s monthly 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 39bps
Per the latest MBA forbearance data through December 20th, the total number of loans now in forbearance decreased by 39 basis points from 2.06% in the prior month to 1.67% as of November 30, 2021.
This leaves roughly 835,000 homeowners still in forbearance.
2. Modifications & Payment Deferrals/Partial Claim Responsible for Nearly Half of Total Exits
Of the cumulative forbearance exits (from June 1, 2020, through November 30, 2021), at the time of forbearance exit, 29.15% resulted in a loan deferral/partial claim and 14.1% resulted in a loan modification or trial loan modification, combining to 43.32 of total exits.
Additionally, 16.73% of the total number of borrowers exited with out a plan in place, continuing a trend that has persisted since MBA started reporting this data.
3. Re-Entries Creeping Back Up
The latest MBA data shows that re-entries have crept steadily up and now account of 13.29% of the total population. While this shouldn’t be ignored, I’m not too concerned on this trend.
The Bottom Line
Overall, we’re extremely relieved to see forbearance numbers almost mirroring pre-pandemic statistics after a tedious and challenging 22 months. I suspect the consistent drop in forbearance numbers can be credited to borrowers who entered forbearance plans in the early days of the pandemic and are now rolling off after 18 months.
This monumental drop below 1 million borrowers in forbearance last month reflects both a strong job market and the expirations of forbearance plans. We expect to see this decreasing trend to continue.
Marina Walsh, CMB, MBA’s Vice President of Industry Analysis, confirmed my assumption explaining:
More borrowers were current on their mortgage payments in November compared to October. This coincides with continued improvement in the labor market – faster wage growth and the unemployment rate dropping to 4.2%
While these numbers show success on the front lines for servicers, it’s vital to not throw in the towel just yet as there is still work to be done entering the new year.
Sagent’s loss mitigation and consumer platforms are here to strengthen borrower relationships and keep you united with your customers as we’re nearing a complete return to normalcy. As always, I’m on standby to answer your policy questions and talk about how to help you care for borrowers during this final push.