As home prices continue to average in excess of $358,000 and up 4.3% year-over-year, rates bob in and out of the 7% range, and affordability struggles linger, the Mortgage Bankers Association (MBA) examines the nation’s latest forbearance numbers, as the total number of loans in forbearance stands at 0.22% as of April 30, 2024.
According to MBA’s estimate, 110,000 homeowners are in forbearance plans, while the nation’s mortgage servicers have provided forbearance options to approximately 8.1 million borrowers since March 2020.
“The number of loans in forbearance has remained stagnant for the first four months of 2024,” said Marina Walsh, CMB, MBA’s VP of Industry Analysis. “While forbearance is still a viable option for homeowners needing temporary mortgage payment relief, its usage has diminished without a major natural disaster or labor market downturn. Moreover, the performance of servicing portfolios and post-forbearance workouts remains strong, despite some fluctuations from month-to-month.”
Driving a flatline
As forbearance numbers level off, factors such as employment and natural disasters which often impact loss mitigation trends, have remained steady as well. According to the U.S. Bureau of Labor Statistics (BLS), total nonfarm payroll employment increased by 175,000 in April 2024, and the number of unemployed people stood at 6.5 million, as the unemployment rate changed little at 3.9%. Job gains were reported in the fields of healthcare, social assistance, transportation, and warehousing.
Another factor noted by Walsh as impacting forbearance numbers is natural disasters. The early portion of the year was relatively quiet, as sporadic storms popped up in the Northeast, but things changed as the spring season began, and two major storms hit Iowa and Texas.
In late April, President Joe Biden declared that a major disaster exists in the State of Iowa, and ordered federal assistance to supplement state, tribal, and local recovery efforts in the areas affected by severe storms and tornadoes beginning April 26. Assistance can include grants for temporary housing and home repairs, low-cost loans to cover uninsured property losses, and other programs to help individuals and business owners recover from the effects of the disaster.
The U.S. Department of Housing and Urban Development (HUD) followed suit by ordering assistance to state, tribal, and local recovery efforts in the areas impacted by these storms. Effective immediately, HUD is providing a 90-day moratorium on foreclosures of mortgages insured by the Federal Housing Administration (FHA), as well as foreclosures of mortgages to Native American borrowers guaranteed under the Section 184 Indian Home Loan Guarantee program. There is also a 90-day extension granted automatically for Home Equity Conversion Mortgages. The moratorium and extension are effective as of the President’s disaster declaration date.
And FEMA has announced that federal disaster assistance was available to the state of Texas to supplement recovery efforts in areas impacted by severe storms, straight-line winds, tornadoes and flooding beginning on April 26, 2024 and continuing. Assistance for Texans impacted includes grants for temporary housing and home repairs, low-interest loans to cover uninsured property losses, and other programs to help individuals and business owners recover from the effects of these storms.
A breakdown in forbearance
In April 2024, the share of Fannie Mae and Freddie Mac loans in forbearance declined one basis point from 0.12% to 0.11%. Ginnie Mae loans in forbearance dropped one basis point from 0.40% to 0.39%, and the forbearance share for portfolio loans and private-label securities (PLS) remained the same at 0.31%.
By reason, 71.1% of borrowers are in forbearance for reasons such as a temporary hardship caused by job loss, death, divorce, or disability, while 11.5% of borrowers were still in forbearance due to COVID-19-related instances.
By stage, 57.3% of total loans in forbearance in the initial forbearance plan stage, while 22.7% are in a forbearance extension. The remaining 20.0% are forbearance re-entries, including re-entries with extensions.
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 April 2024, up 17 basis points from 95.92% in March 2024.
The five states reporting the highest share of loans that were current as a percent of servicing portfolio:
- Washington
- Colorado
- Oregon
- California
- Montana
The five states reporting the lowest share of loans that were current as a percent of servicing portfolio:
- Louisiana
- Mississippi
- Alabama
- Indiana
- New York
