Latest report shows an increase in forbearance exits resulting in modifications
The number of homeowners in mortgage forbearance has hit a new post-pandemic low of one million – down nine basis points week over week to 2.06% of servicers’ portfolio volume.
“One million homeowners remained in forbearance as we reached the end of October, but the forbearance share continued to decline, with larger declines for portfolio and PLS loans,” said MBA chief economist Mike Fratantoni.
The share of Fannie Mae and Freddie Mac loans in forbearance posted a five-basis-point decrease to 0.92%, and Ginnie Mae loans fell 13 basis points to 2.52%. The forbearance share for portfolio loans and private-label securities (PLS) declined 13 basis points to 5%.
Fratantoni noted that the number of borrowers who exited forbearance and went into modifications grew during the last week of October. This may be a sign that they have not yet regained their pre-COVID level of income, he said.
Approximately 13.4% of forbearance exits resulted in a loan modification or trial loan modification, 12% in reinstatements, and 7% in loans paid off through either a refinance or by selling the home. The remaining 1.4% ended up in repayment plans, deed-in-lieus, or other reasons.
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“The strong job market report from October, with another drop in the unemployment rate and a pickup in wage growth, is a positive sign for homeowners still struggling to get back on their feet,” Fratantoni said.
