While the number of homeowners in forbearance has dropped slightly, mortgage performance could be showing signs of borrower stress, according to the Mortgage Bankers Association.
In its monthly Loan Monitoring Survey released this week, the MBA found that the total number of loans now in forbearance decreased by 4 basis points from 0.85 percent of servicers’ portfolio volume in May to 0.81 percent in June. The MBA estimates that 405,000 homeowners are in forbearance plans.
The share of Fannie Mae and Freddie Mac loans in forbearance decreased 3 basis points to 0.35 percent. Ginnie Mae loans in forbearance increased 1 basis point to 1.26 percent, and the forbearance share for portfolio loans and private-label securities declined 18 basis points to 1.68 percent.
“The overall forbearance rate in June stayed relatively flat with just a 4-basis-point decline from May,” Marina Walsh, MBA’s vice president of industry analysis, said in a statement. “Borrowers continue to exit forbearance, but at a much slower pace than six or nine months ago. New forbearance requests are still trickling in, as permitted under the CARES Act, resulting in very little movement in the overall percentage of loans in forbearance.”
The MBA said that 29.6 percent of total loans in forbearance are in the initial forbearance plan stage, compared to 28.2 percent in May. The remaining loans include 57.6 percent that are in a forbearance extension and 12.6 percent that are forbearance re-entries, including re-entries with extensions.
For depository institutions, 0.62 percent of their loan portfolio is in forbearance, down from 0.67 percent in May, while 1.03 percent of independent mortgage banks’ portfolios is in forbearance, compared to 1.06 percent in May.
The percent of borrowers current on their mortgage – not delinquent or in foreclosure – dropped by 14 basis points in June to 95.71.
June’s mortgage results have some early indicators of borrower stress tied to high inflation, rising interest rates and other factors, Walsh said.
“For example, overall servicing portfolio performance dropped by 14 basis points to 95.71 percent current in June, and the performance of post-forbearance workouts declined by 140 basis points to 81.34 percent,” Walsh said. “It is worth monitoring post-forbearance workouts for all borrowers, and particularly for borrowers with government loans, who are typically the most vulnerable to economic slowdowns.”