The share of forborne mortgages fell 39 basis points to 1.67% as of November 30, according to the Mortgage Bankers Association (MBA), the latest sign that the sun is setting on the forbearance agreements concluded under the CARES law.
Under COVID-19 legislation signed by President Donald Trump in April 2020, many homeowners could make deals with their lenders on a one-year or up to 18-month forbearance plan. With the expiration of many such plans, abstention fell at all levels.
According to the MBA, only 835,000 homeowners are still on the forbearance plan, after a peak of more than 4 million borrowers in the COVID era.
The most notable decline was in portfolio loans and private label securities (PLS), which fell 106 basis points to 3.94%.
Ginnie mae credits decreased by 42 basis points to 2.10% of the total. During this time, Fannie mae and Freddie Mac loans in forbearance fell 16 basis points to 0.76% in November.
“The share of loans in forbearance in November fell – albeit at a slower pace than in October – as borrowers continued to approach the expiration of their forbearance plans and moved to permanent loan restructuring solutions. Marina Walsh, vice president of MBA industry analysis, said in a statement
The survey included data on 36.5 million managed loans as of November 30, or 73% of the prime mortgage service market. MBA figures show that 18.3% of total forbearance loans were in the initial stage last month, and 68.4% were in extension of forbearance. The remaining 13.3% were income.
Over the past 17 months (June 2020 to November 2021), MBA data revealed that 29.1% of forbearance exits resulted in a loan deferral or partial claim. In addition, 19.9% represented borrowers who continued to pay during the forbearance period.
However, 16.8% were borrowers who had not made their monthly payments and did not have a loss mitigation plan. In addition, 14.1% resulted in a loan modification or a trial loan modification.
Analysis of the post-forbearance landscape shows that 83.7% of total loan arrangements completed since 2020 were up to date in November, up from 84% in October.
“While there was some deterioration in borrower performance in post-forbearance workouts, four out of five overall stayed current through November,” Walsh said.
Turning to the service sector in general, total loans not past due or foreclosed fell from 94.3% of the volume of the service portfolio in October to 94.6% in November, reflecting faster growth in wages and the unemployment rate falling to 4.2%, according to Walsh.