Forbearances continue to fall, driven by non-agency loans


The Mortgage Bankers Association has released its monthly update on the share of forborne mortgages. Abstentions increased at the start of the pandemic, but have gradually decreased since May 2020.

Fannie and Freddie loans (the majority of the mortgage market) have been the best throughout this process. As a result, they’ve had less ground to cover recently. In the current report, the percentage of Fannie/Freddie loans in forbearance fell from 0.68 to 0.64%.

Compare that to non-agency (portfolio or private label) lending which fell from 3.43% to 3.02% – a significantly faster rate of reduction, but from a much higher level.

Ginnie Mae Loans (FHA, USDA, VA) broke the rules to some degree. They continue to account for a higher proportion of forbearances than Fannie/Freddie Loans, but they haven’t declined as rapidly this time, falling just 0.03% to 1.60%.

Other highlights from the MBA report:

  • By stage, 26.8% of total loans in forbearance are in the initial stage of the forbearance plan, while 59.5% are in an extension of forbearance. The remaining 13.7% are admissions with abstention, including admissions with extensions.
  • Among the cumulative abstention exits for the period from June 1, 2020 to January 31, 2022, at the time of the abstention exit:
    • 29.1% resulted in a loan deferral/partial claim.
    • 19.3% represented borrowers who continued to make their monthly payments during their forbearance period.
    • 17.0% represented borrowers who had not made all of their monthly payments and left forbearance without a loss mitigation plan yet in place.
    • 14.9% resulted in a loan modification or trial loan modification.
    • 11.6% resulted in reinstatements, in which overdue amounts are refunded upon exit from forbearance.
    • 6.8% resulted in loans being repaid either by refinancing or by selling the home.
    • The remaining 1.3% resulted from repayment plans, short selling, replacement acts or other reasons.

  • The five states with the The highest share of outstanding loans as a percentage of the management portfolio: Idaho, Colorado, Washington, Utah and Oregon.
  • The five states with the the lowest share of outstanding loans as a percentage of the management portfolio: Louisiana, Mississippi, New York, Indiana and Illinois.
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