Forbearance rate resumes decline after upward movement

Following three weeks of no improvement, the number of mortgages in coronavirus-related forbearance fell 6 basis points between Nov. 30 and Dec. 6, according to the Mortgage Bankers Association.

Home loans in forbearance plans represent 5.48% — approximately 2.7 million homeowners — of all outstanding mortgages, down from 5.54% the prior week. The share of forborne loans at independent mortgage bank servicers decreased to 5.98% from 6.02%, while depositories dropped to 5.38% from 5.48%.

While the rates improved, positive coronavirus cases surged over the same time frame. With more borrowers in need of relief, new forbearance requests hit the highest level since the beginning of August and servicer call volume reached the highest level since the middle of April, said Mike Fratantoni, the MBA's senior vice president and chief economist.

"Compared to the last two months, more homeowners exiting forbearance are using a modification — a sign that they have not been able to fully get back on their feet, even if they are working again," Fratantoni said in a press release. "The latest economic data is showing a slowdown, particularly an increase in layoffs and long-term unemployment."

Remaining at the vanguard of forbearance rates by loan types, conforming mortgages — those purchased by Fannie Mae and Freddie Mac — started a new streak of declines, going to 3.26% from 3.34%.

Ginnie Mae loans in forbearance — Federal Housing Administration, Department of Veterans Affairs and U.S. Department of Agriculture Rural Housing Service products — dropped to 7.68% from 7.89%. Meanwhile, private-label securities and portfolio loans — products not addressed by the coronavirus relief act — was the only segment to record an increase of mortgages in forbearance, rising to 8.89% from 8.7%.

An 18.72% share of all forborne mortgages sit in the initial forbearance stage, while 78.72% shifted to extended plans. The remaining 2.56% re-entered forbearance after exiting previously.

Forbearance requests as a percentage of servicing portfolio volume grew to 0.12% from 0.08% the week earlier. After a survey low, call center volume as a percentage of portfolio volume jumped to 9.4% from 5.3%.

The MBA's sample for this week's survey includes a total of 49 servicers with 26 independent mortgage bankers and 21 depositories. The sample also included two subservicers. By unit count, the respondents represented about 74%, or 37.1 million, of outstanding first-lien mortgages.