How many mortgage loans are in forbearance?

The Mortgage Bankers Association (MBA) has announced that the percentage of mortgage loans in forbearance rose to 0.27% as of July 31, 2024, reflecting an uptick in the number of homeowners seeking relief. This increase follows a period of stability and was primarily attributed to recent natural disasters, which affected a significant portion of borrowers.

The MBA’s monthly Loan Monitoring Survey estimated that approximately 135,000 homeowners are currently in forbearance plans, marking an increase of about 20,000 from the previous month. Since the onset of the COVID-19 pandemic in March 2020, mortgage servicers have provided forbearance to roughly 8.2 million borrowers.

Marina Walsh, MBA’s vice president of industry analysis, noted the key drivers behind the rise.

“July saw an increase of approximately 20,000 more US homeowners in forbearance compared to the previous month,” Walsh said. “Most of this change can be attributed to recent natural disasters, which accounted for 27% of all loans in forbearance last month compared to 16% in June.”

Despite the increase in forbearance rates, Walsh highlighted that overall loan servicing and workout performance showed improvement over June’s results, though they remain below levels seen in May and last year.

Key survey findings

• Total loans in forbearance: Increased by four basis points in July 2024, rising from 0.23% to 0.27%.
• Ginnie Mae loans: The forbearance rate increased by 12 basis points, from 0.44% to 0.56%.
• Fannie Mae and Freddie Mac loans: The forbearance rate increased by one basis point, from 0.11% to 0.12%.
• Portfolio and private-label securities (PLS) loans: The forbearance rate increased by two basis points, from 0.31% to 0.33%.

The survey also highlighted that 66.8% of borrowers currently in forbearance cited temporary hardships, such as job loss, death, or disability, as the reason. Meanwhile, 26.7% of borrowers attributed their need for forbearance to natural disasters, a notable increase from the previous month. Only 6.6% of borrowers remain in forbearance due to COVID-19-related hardships.

In terms of loan performance, the percentage of loans in servicing portfolios that are current increased to 95.76% in July, up from 95.65% in June. However, this figure still trails behind the levels recorded in May.

The survey identified notable variations in loan performance across regions. The states with the highest share of current loans included Washington, Idaho, Colorado, California, and Oregon. In contrast, Louisiana, Mississippi, Indiana, Alabama, and West Virginia had the lowest share of current loans.

The MBA has asserted it will continue monitoring the trends closely, with the next Loan Monitoring Survey set for release on September 23, 2024.

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