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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 74 October 2023 J O U R N A L FORBEARANCE RATE EDGES CLOSER TO PRE- PANDEMIC LEVELS A ccording to the Mortgage Bankers Association's (MBA) monthly Loan Monitoring Survey, the total number of loans now in forbearance nationwide decreased by six basis points from 0.39% of servicers' portfolio volume in the prior month from 0.39% to 0.33% as of August 31, 2023. According to MBA's estimate, 165,000 homeowners are currently in forbearance plans, and since March 2020, mortgage ser- vicers have provided forbearance options to approximately 7.92 million borrowers. By loan type, the MBA found that in August, the share of Fannie Mae and Freddie Mac loans in forbearance decreased one basis point from 0.20% to 0.19%. Ginnie Mae loans in forbearance decreased 15 basis points from 0.80% to 0.65%, and the forbearance share for portfolio loans and private-label securi- ties (PLS) decreased six basis points from 0.45% to 0.39%. "The forbearance rate is just eight basis points shy of where it was at the beginning of March 2020, which indicates that most homeowners have recovered from the pandemic," said Marina Walsh, CMB, MBA's VP of Industry Analysis. "While there was a monthly decline in the performance of post-forbearance work- outs in August, overall mortgage servicing portfolios remain resilient. Compared to other credit types with weaker perfor- mance, the percentage of home mortgages that are performing is holding steady at a non-seasonally adjusted 96%." Total completed loan workouts from 2020 and onward (repayment plans, loan deferrals/partial claims, loan modifica- tions) that were current as a percent of total completed workouts decreased to 73.43% in August from 73.73% the previ- ous month. Loans in forbearance as a share of servicing portfolio volume as of August 31, 2023: » Total: 0.33% (previous month: 0.39%) » Independent Mortgage Banks (IMBs): 0.41% (previous month: 0.48%) » Depositories: 0.27% (previous month: 0.30%) » By reason, 60.4% of borrowers are in forbearance because of COVID-19. An- other 7.2% are in forbearance because of a natural disaster. The remaining 32.4% of borrowers are in forbearance for other reasons such as a temporary hardship caused by job loss, death, divorce, disability, etc. » By stage, 39.7% of total loans in for- bearance are in the initial forbearance plan stage, while 51.6% are in forbear- ance extension. The remaining 8.6% are forbearance reentries, including reentries with extensions. Of the cumulative forbearance exits for the period from July 1, 2020, through August 31, 2023, at the time of forbear- ance exit: » Some 29.5% resulted in a loan deferral/ partial claim. » An estimated 17.8% represented borrowers who continued to make their monthly payments during their forbearance period. Default Servicing » Roughly 18.1% represented borrowers who did not make all of their monthly payments and exited forbearance with- out a loss mitigation plan in place yet. » Approximately 16.1% resulted in a loan modification or trial loan modification. » Nearly 11% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance. » 6.5% resulted in loans paid off through either a refinance or by selling the home. » The remaining 1.2% resulted in repay- ment plans, short sales, deed-in-lieus, or other reasons. » Total loans serviced that were current (not delinquent or in foreclosure) as a percentage of servicing portfolio volume (#) increased to 96.09% (on a non-seasonally adjusted basis) in Au- gust 2023 from 96.02% in July 2023. The five states reporting the highest share of loans that were current as a per- cent of servicing portfolio include: » Washington » Idaho » Colorado » Oregon » California The five states that reported the lowest share of loans that were current as a percent of servicing portfolio: » Mississippi » Louisiana » Indiana » New York » West Virginia