Servicer phones are ringing as forbearance decreases
August 16, 2021, 4:05 pm
The share of Fannie Mae and Freddie Mac loans in forbearance fell to 1.69%
The volume of loans in forbearance fell 14 basis points, from 3.40% the prior week to 3.26% for the week ending August 8, per the latest Mortgage Bankers Association report, while new forbearance requests and calls to servicers increased.
According to the trade association's estimate, 1.6 million homeowners are in a forbearance plan.
Forbearance numbers decreased across the board. The share of Fannie Mae and Freddie Mac loans in forbearance also fell five basis points to 1.69%. Ginnie Mae loans in forbearance decreased 23 basis points to 3.95%, and the share of portfolio loans and private-label securities in forbearance decreased 32 basis points to 7.05%.
The percentage of loans in forbearance for independent mortgage bank servicers decreased 17 basis points to 3.46%, and the percentage of loans in forbearance for depository servicers decreased 13 basis points to 3.36%.
"The largest decrease in a month in the share of loans in forbearance came from a jump in forbearance exits, as many homeowners are nearing the end of their forbearance terms. The forbearance share declined for all investor and servicer categories," said Mike Fratantoni, MBA's senior vice president and chief economist.
New forbearance requests increased slightly this week, especially from Ginnie Mae borrowers, but Fratantoni said that overall trends remain positive.
"Incoming data continues to support our forecast of an improving job market in the months ahead," Fratantoni said.
The MBA found that forbearance requests as a percent of servicing portfolio volume increased to 0.06% from 0.04% the week prior.
The share of borrowers exiting their forbearance plan without a loss mitigation plan in place also increased.
From June 1, 2020, through August 8, 2021, 16.1% of borrowers who did not make all of their monthly payments exited forbearance without a loss mitigation plan, up from 15.7% for the period ending in the previous week. Of forbearance exits during that period, 13.2% resulted in reinstatement, with borrowers paying back past-due amounts, while 28.2% resulted in a partial claim or deferral. Another 22.7% of those exiting forbearance had never stopped making their monthly payments.
Calls to servicers increased this week, as a percent of servicing portfolio volume, to 7.5% from 6.8%. The average speed to answer increased from 0.9 minutes to 1.5 minutes, while abandonment rates increased to 5.0% from 3.6%. The average call length decreased to 7.5 minutes from 7.9 minutes.
Nearly 750,000 active forbearance plans will expire in the next two months, according to the latest figures from Black Knight, which means servicers will process up to 18,000 plans per business day over those two months.
As servicers cope with additional call volume, the Consumer Financial Protection Bureau is watching to ensure servicers make borrowers aware of the options available to them.
In a report the watchdog agency released last week, which focused on 16 mortgage servicers from December 2020 to April 2021, the CFPB found a marked increase in the share of borrowers exiting forbearance and becoming delinquent without any loss mitigation in place.
The report found that mortgage servicers have been inundated with calls. December through April, calls to the 16 mortgage servicers topped 4 million. In March, that number spiked to more than 5 million. One servicer the CFPB surveyed received 650,000 calls in February, 750,000 in March and 625,000 April.
Some servicers are keeping up with the high call volume, while others are struggling to do so, causing higher wait times for some borrowers.
The report found that despite the additional options those with federally-backed mortgages have, delinquency rates in across agency and non-agency loans were comparable. In December, about 10% of borrowers exiting forbearance became delinquent. By April, delinquent exits rose to 30%.
The CFPB repeated that it will be watching mortgage servicers closely in the months to come, and that there could be consequences for sub-par performance.
"Servicers who find themselves at the bottom of the pack should immediately take corrective steps," said Uejio, in a statement accompanying the survey. "The CFPB will hold accountable those servicers who cause harm to homeowners and families."