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Mortgage Loans in Forbearance Dropped 26 Basis Points at the End of 2021

Mortgage Loans in Forbearance Dropped 26 Basis Points at the End of 2021
Written by Publishing Team

The new monthly loan monitoring survey by the Mortgage Bankers Association (MBA) shows that the total number of now foreclosed loans has fallen by 26 basis points from 1.67% of provider portfolio size in the previous month to 1.41% as of December 31, 2021. According to an estimate by the MBA Business, there are 705,000 homeowners in patience plans.

The share of Fannie Mae and Freddie Mac loans fell 8 basis points to 0.68%. Ginnie Mae’s deductible loan fell 47 basis points to 1.63%, and the Portfolio Loan and Private Securities (PLS) share of deductible fell 51 basis points to 3.43%.

“The share of loans in forbearance continued to decline in December 2021. This was particularly the case for government, private and portfolio loans, as these loans had higher tolerances than loans backed by Fannie Mae and Freddie Mac,” notes Marina Walsh, CMB, Vice President Head of MBA for Industry Analysis. “With the number of delinquent borrowers continuing to fall below 750,000, the pace of monthly exits is at its lowest since the MBA began tracking exits in June 2020.”

“It is possible that the remaining borrowers have either experienced permanent hardship that may require more sophisticated loan experimentation solutions, or they have had a recent hardship that they are now looking for,” Walsh adds.

Total loans granted decreased by 26 basis points in December 2021 compared to November 2021 from 1.67% to 1.41%.

By investor type, the share of Ginnie Mae’s loan deductibles decreased from 2.10% to 1.63% compared to the previous month. The share of Fannie Mae and Freddie Mac loans in repayment decreased from 0.76% to 0.68% while the share of other loans (such as portfolio loans and PLS loans) decreased from 3.94% to 3.43%.

Total loans granted as a percentage of services portfolio size (#) as of December 31, 2021 was 1.41% from the previous month at 1.67%. Shares of Independent Mortgage Banks (IMBs) were up 1.66% from 1.94% while deposits were 1.24% from 1.52%.

By stage, 23.2% of the total loans in the endurance period are in the initial forbearance plan stage, while 63.1% are in the patience extension stage. The remaining 13.7% are tolerance re-entries, including re-entries with extensions.

Among the cumulative forbearance exits for the period from June 1, 2020 through December 31, 2021, at the time of patience exit, 29.1% resulted in partial deferment/claiming of the loan while 19.5% represented borrowers who continued to make their monthly payments during their forbearance period. Additionally, it represents 16.9% of borrowers who have not paid all their monthly payments and are out of patience without a loss mitigation plan in place yet. In addition, 14.6% resulted in a loan modification or trial loan modification, 11.7% resulted in repossession, and 6.9% resulted in repayment of loans either through refinancing or by selling the home. The remaining 1.3% resulted in payment plans, short sales, restricted instrument or other reasons.

Total serviced loans that were on-going (not past due or under foreclosure) as a percentage of service portfolio size (#) increased to 94.85% in December 2021 from 94.58% in November 2021 (on a seasonally unadjusted basis).

The five states with the highest share of loans as a percentage of the services portfolio were Idaho, Washington, Colorado, Utah and Oregon. The five states with the lowest share of current loans as a percentage of the services portfolio were Louisiana, Mississippi, New York, Illinois and Indiana. Total loan drills completed from 2020 onwards (payment plans, loan deferrals/partial claims, loan modifications) that were current as a percentage of total completed drills decreased to 83.50% last month from 3.69% in November.

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