"It is worth monitoring post-forbearance workouts," MBA says.
An estimated 405,000 homeowners remain in forbearance plans as of June 30, according to data from the Mortgage Bankers Association’s latest loan monitoring survey.
The total number of loans in forbearance stayed relatively flat with just a -four-basis-point drop, down to 0.81% from 0.85% of servicers’ portfolio volume in May. About 30% of total loans in forbearance were in the initial stage, while 57.6% were in a forbearance extension. The remaining 12.6% were forbearance re-entries, including re-entries with extensions.
“Borrowers continue to exit forbearance, but at a much slower pace than six or nine months ago,” said Marina Walsh, MBA’s vice president of industry analysis. “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.”
By investor type, the share of Ginnie Mae loans in forbearance decreased three basis points to 0.35%. Ginnie Mae loans in forbearance increased one basis point to 1.26%, and the forbearance share for portfolio loans and private-label securities (PLS) fell 18 basis points to 1.68%.
Walsh also pointed out some early indicators of borrower stress resulting from high inflation and rising interest rates.
“For example, overall servicing portfolio performance dropped by 14 basis points to 95.71% current in June, and the performance of post-forbearance workouts declined by 140 basis points to 81.34%,” she said. “It is worth monitoring post-forbearance workouts – particularly for borrowers with government loans, who are typically the most vulnerable to economic slowdowns.”