DS News

MortgagePoint September 2023

DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.

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Page 79 of 99

MortgagePoint ยป Your Trusted Source for Mortgage Banking and Servicing News 78 J O U R N A L September 2023 Default Servicing NEARLY 70% OF BORROWERS IN FORBEARANCE CITE PANDEMIC- RELATED HARDSHIPS T he Mortgage Bankers Association's (MBA) monthly Loan Monitoring Survey revealed that the total num- ber of loans now in forbearance dropped by five basis points from 0.44% of servicers' port- folio volume in the prior month to 0.39% as of July 31, 2023. According to MBA's estimate, 195,000 homeowners are now in forbearance plans. Since March 2020, mortgage servicers have provided forbearance to approximately 7.9 million borrowers nationwide. In July 2023, the share of Fannie Mae and Freddie Mac (GSE) loans in forbearance decreased just one basis point from 0.21% to 0.20%. Ginnie Mae loans in forbearance de- creased 13 basis points from 0.93% to 0.80%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased seven basis points from 0.52% to 0.45%. "The prevalence of forbearance plans has dramatically dropped since 2020, and the reasons that borrowers are in forbearance are changing," said Marina Walsh, CMB, MBA's VP of Industry Analysis. "About two-thirds of borrowers are still in forbearance because of the effects of COVID-19, but a growing share of borrowers are in forbearance for other reasons that cause temporary hardship such as financial distress or natural disasters. With the COVID-19 national emergency lifted, Fannie Mae and Freddie Mac recently an- nounced the retirement of certain COVID-19 flexibilities relating to forbearance plans and workouts." By reason, 69.3% of borrowers were re- ported in forbearance because of COVID-19. Another 6.5% were in forbearance due to a natural disaster. The remaining 24.2% of bor- rowers were in forbearance for other reasons, such as a temporary hardship caused by job loss, death, divorce, disability, etc. Issued August 9, Lender Letter LL- 2023-07 COVID-19 Payment Deferral and Fannie Mae Flex Modification for COVID-19 Impacted Borrowers updates policies pre- viously published in LL 2021-07. Effective November 1, 2023, the Quality Right Party Contact (QRPC) flexibility will be removed when evaluating borrowers for a COVID-19 payment deferral or flex modification. Eligi- bility criteria for these options will be revised to facilitate their retirement, along with the announcement of a final evaluation date and modification effective date. "Given the recent natural disasters impacting California, Washington, and Hawaii, forbearance is one way for mortgage servicers to mitigate the potential impacts on homeowners," Walsh said. CoreLogic estimates that approximately

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