For the first time in 18 months, servicers’ forbearance asset volume fell below 1.5% in December 2021. According to the Mortgage Bankers Association (MBA), the overall number of loans under forbearance declined by 26 basis points in December, to 1.41% from 1.67% in November.
The portfolio loans and private-label securities (PLS) category saw the biggest drop, falling 51 basis points to 3.43%. In addition, Ginnie Mae forbearance loans fell 47 basis points to 1.63% of servicers’ assets volume. On the other hand, Fannie Mae and Freddie Mac loans fell by eight basis points to 0.68%.
According to Marina Walsh, MBA’s vice president of industry analysis, the rate of monthly forbearance exits has hit its lowest level since MBA began tracking exits in June 2020, as the number of borrowers in forbearance continues to decline below 750,000. In December, overall forbearance requests were for 0.15% of servicing portfolio volume, while exits accounted for 0.39%. According to the poll, in December 2021, 23.2% of all loans were in the first stage, while 63.1% were in a forbearance extension. Re-entries made up the remaining 13.7%.
MBA data shows that 29.1% of withdrawals resulted in a debt deferral or partial claim in the last 18 months. In addition, 19.5% of debtors continued to make payments during the forbearance period. However, 16.9% of borrowers failed to meet their monthly payments and had no loss prevention plan in place. According to the survey, in December of 2021, 94.85% of loans serviced were not defaulted or in foreclosure, up from 94.58% in November.
To read more on the decline of the forbearance rate in the lending industry across the country, click here.
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