by Calculated Risk on 6/21/2022 04:00:00 PM

Note: This is as of May 31st.

From the MBA: Share of Mortgage Loans in Forbearance Decreases to 0.85% in May

The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey revealed that the total number of loans now in forbearance decreased by 9 basis points from 0.94% of servicers’ portfolio volume in the prior month to 0.85% as of May 31, 2022. According to MBA’s estimate, 425,000 homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 5 basis points to 0.38%. Ginnie Mae loans in forbearance decreased 4 basis points to 1.25%, and the forbearance share for portfolio loans and private-label securities (PLS) declined 29 basis points to 1.86%.

“Servicers are whittling away at the remaining loans in forbearance, even as the pace of monthly forbearance exits slowed in May to a new survey low. Most borrowers exiting forbearance are moving into either a loan modification, payment deferral, or a combination of the two workout options,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis.

Added Walsh, “It is a positive sign to see the overall servicing portfolio performance reach 95.85 percent current in May – 21 basis points higher than April’s figures. However, it is worth watching if the rapid increase in interest rates for all loans, combined with inflation that is outpacing wage growth, complicates post-forbearance workout options and puts additional pressure on borrowers in existing post-forbearance workouts.”
emphasis added

Click on graph for larger image.

This graph shows the percent of portfolio in forbearance by investor type over time.

The share of forbearance plans is decreasing, and, at the end of May, there were about 425,000 homeowners in forbearance plans.