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January 2024 » thefivestar.com 63 January 2024 J O U R N A L portfolio volume in the prior month to 0.26% as of November 30, 2023. According to MBA's estimate, 130,000 homeowners are currently in forbear- ance plans. Mortgage servicers have provided forbearance to approximately 8.1 million borrowers since March 2020. In November 2023, the share of GSE loans (Fannie Mae and Freddie Mac) in forbearance declined two basis points from 0.18% to 0.16%. Ginnie Mae loans in forbearance decreased five basis points from 0.52% to 0.47%, and the forbearance share for portfolio loans and private-la- bel securities (PLS) decreased two basis points from 0.32% to 0.30%. "Nearly 96% of all home mortgages are performing, which underscores how strong servicing portfolio performance is right now with the same resilience seen in the U.S. labor market," said Marina B. Walsh, CMB, MBA's VP of Industry Anal- ysis. "Meanwhile, the performance of loan workouts is solid, but declined last month. Roughly 70% of loan workouts initiated since 2020 are current." By reason, 53.6% of borrowers are in forbearance for reasons such as a temporary hardship caused by job loss, death, divorce, or disability; while 34.3% of borrowers are in forbearance because of COVID-19. Another 12.1% were in forbearance due to a natural disaster. By stage, 49.0% of total loans in forbearance are in the initial forbearance plan stage, while 35.1% are in a forbear- ance extension. The remaining 15.8% are forbearance reentries, including reentries with extensions. "MBA forecasts an economic down- turn in 2024, and there are signs of early distress in other credit types such as car loans and credit cards," Walsh added. "Those borrowers who struggled in making their mortgage payments in the past may find themselves in similar situa- tions in a softening economy and rising unemployment." According to the Bureau of Labor Statistics (BLS), total nonfarm payroll employment increased by 199,000 in November, and the unemployment rate edged down to 3.7%. Job gains occurred in healthcare and government. Employ- ment also increased in manufacturing, reflecting the return of workers from a strike. Employment in retail trade declined. Of the cumulative forbearance exits for the period from July 1, 2020, through November 30, 2023, at the time of for- bearance exit: » An estimated 29.4% resulted in a loan deferral/partial claim. » Roughly 17.7% represented borrowers who continued to make their monthly payments during their forbearance period. » Some 18.4% represented borrowers who did not make all of their monthly pay- ments and exited forbearance without a loss mitigation plan in place yet. » Approximately 16.1% resulted in a loan modification or trial loan modification. » An estimated 10.8% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance. » Just 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, deeds-in-lieu, or other reasons. The five states with the highest share of loans that were current as a percent of servicing portfolio included: 1. Washington 2. Colorado 3. Idaho 4. Oregon 5. Montana The five states with the lowest share of loans that were current as a percent of servicing portfolio included: 1. Louisiana 2. Mississippi 3. Indiana 4. New York 5. Illinois Total completed loan workouts from 2020 and onward (repayment plans, loan deferrals/partial claims, loan modifi- cations) that were current as a percent of total completed workouts decreased to 71.28% in November from 72.30% the previous month. SNAPSHOT: Q3 COMMERCIAL DELINQUENCY RATES A ccording to the Mortgage Bankers Association's (MBA) latest Commercial Delinquency Report covering the third quarter of 2023, commercial delinquencies increased during this period. "Not unexpectedly, delinquency rates on commercial mortgages increased for the third consecutive quarter," said Jamie Woodwell, MBA's Head of Commercial Real Estate Research. "Every major capital source saw delinquency rates rise, driven by higher interest rates, changes in some property market fundamentals, and uncertainty about property values. CRE market activity remains muted, further complicating the situation." Woodwell continued, "CRE markets are large and heterogeneous. Data from MBA's own survey released earlier in the quarter show wide differences in mortgage performance by property type. Deal vin- tage, term, market, and many other factors also play into which loans are facing pres- sure. These differences are likely to remain important in the year ahead." MBA's quarterly analysis looks at commercial delinquency rates for five of the largest investor groups: com- mercial banks and thrifts, commercial mortgage-backed securities (CMBS), life insurance companies, and Fannie Mae and Freddie Mac. Together, these groups hold more than 80% of commer- cial mortgage debt outstanding. MBA's analysis incorporates the measures used by each individual investor group to track the performance of their loans. Because each investor group tracks delinquencies in its own way, delinquency rates are not comparable from one group to another. As an example, Fannie Mae reports loans receiving payment forbearance as delin- quent, while Freddie Mac excludes those loans if the borrower is in compliance with the forbearance agreement." Based on the unpaid principal bal- ance (UPB) of loans, delinquency rates