Nearly 1/4 Of Borrowers Exiting Forbearance Have No Plan In Place

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 month:

1. 1.41% of Total Mortgages Remain in Forbearance

Per the latest MBA data (as of January 18th, 2022), total number of loans now in forbearance decreased by 26 basis points from 1.67% the month prior to 1.41%.

Total Mortgages in Forbearance (Source: Mortgage Bankers Association)

This leaves approximately 705,000 borrowers still in forbearance; a significant milestone for the pandemic recovery.

2. Borrowers Exiting Without a Plan Remain an Issue

Of the cumulative forbearance exits (from June 1, 2020, through December 31, 2021), at the time of forbearance exit, 29.13% resulted in a loan deferral/partial claim, 19.54% represented borrowers who continued to make their monthly payments during their forbearance period, and 16.89% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.

In the last month, the amount of exits without a plan accounted for 22.25%.

While these trends are overall positive and headed in a positive direction course, we’re not done just yet as there are still borrowers in need of our help.

3. Re-entries Have Stalled Out

The latest MBA data shows that 23.23% of total loans in forbearance are in the initial forbearance plan stage, while 63.08% are in a forbearance extension. The remaining 13.69% are forbearance re-entries (including re-entries with extensions).

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

Of that remaining 13.69%, just 11.67% are re-entries without an extension. This slight drop from 11.84% (as of December 31st, 2021) is fantastic to see, but we can’t give up the fight just yet.

The Bottom Line

While these positive trends were anticipated, most of the population of remaining borrowers is going to need significant help to get back on track. Marina Walsh, MBA’s Vice President of Industry Analysis, agreed with my concern, explaining:

It is likely that the remaining borrowers in forbearance have experienced either a permanent hardship that may require more complex loan workout solutions, or they have encountered a recent hardship for which they are now seeking relief.

The battle we’ve been facing over the last two years has been challenging and arduous, and it’s vital that we continue fighting to help these borrowers out of hardship. Sagent’s loss mitigation and consumer platforms are here to ensure the last stretch of the road to recovery is as effortless as possible for you and your customers. I’m on stand by to answer your policy questions and talk about how to help you care for borrowers during the final push.

LET'S CONNECT AND TALK SHOP

This has been a challenging period for servicers, and we haven't reached the surface just yet. How can Sagent help you get your borrowers to safety with ease?

More Blog Posts