The Mortgage Bankers Association’s (MBA) July Loan Monitoring Survey reported the total number of loans in forbearance fell by 5 basis points to 0.39 percent, from 0.44 percent of servicers’ portfolio volume in June. MBA estimated 195,000 homeowners are in forbearance plans.
The share of Fannie Mae and Freddie Mac loans in forbearance in July dipped 1 basis point to 0.2 percent, Ginnie Mae loans in forbearance decreased 13 basis points to 0.8 percent, and the forbearance share for portfolio loans and private-label securities (PLS) fell 7 basis points to 0.45 percent.
“The prevalence of forbearance plans has dramatically dropped since 2020, and the reasons that borrowers are in forbearance are changing,” MBA’s Vice President of Industry Analysis Marina Walsh said. “About two-thirds of borrowers are still in forbearance because of the effects of COVID-19, but a growing share of borrowers are in forbearance for other reasons that cause temporary hardship such as financial distress or natural disasters. With the COVID-19 national emergency lifted, Fannie Mae and Freddie Mac recently announced the retirement of certain COVID-19 flexibilities relating to forbearance plans and workouts.
According to the MBA survey, 69.3 percent of borrowers are in forbearance because of COVID-19, 6.5 percent because of a natural disaster, and 24.2 percent for other reasons such as a temporary hardship caused by job loss, death, divorce, or disability.
By stage, 36.5 percent are in the initial forbearance plan stage, 53.3 percent are in a forbearance extension and 10.3 percent are forbearance re-entries.
The five states with the highest share of loans current as a percent of servicing portfolio were Washington, Colorado, Idaho, Oregon, and California. The five with the lowest share were Louisiana, Mississippi, Indiana, New York, and West Virginia.