Mortgage Forbearance Levels Down Slightly in March

The total number of mortgages now in forbearance dipped by 2 basis points from 0.38% of servicers’ portfolio volume in February to 0.36% by the end of March, according to data from the Mortgage Bankers Association (MBA), which estimated 180,000 homeowners are in forbearance plans.

The share of Fannie Mae and Freddie Mac loans in forbearance decreased 2 basis points to 0.13% in March while Ginnie Mae loans in forbearance decreased by 1 basis points to 0.83%, and the forbearance share for portfolio loans and private-label securities (PLS) decreased 4 basis points to 0.33%.

The main reason cited by borrowers (76%) for having loans in forbearance were temporary hardship caused by job loss, death, divorce, or disability. Another 21.4% were in forbearance because of a natural disaster and the remaining 2.6% of borrowers were still in forbearance because of Covid-19.

The five states with the highest share of loans that were current as a percent of servicing portfolio are Washington, Idaho, Alaska, Oregon, and Colorado. The five states with the lowest share of loans that were current as a percent of servicing portfolio are Louisiana, Mississippi, Indiana, West Virginia, and Alabama.

“Overall mortgage performance improved in March, with more borrowers making their mortgage payments and fewer borrowers in forbearance and loan workouts compared to the prior month,” said MBA’s Vice President of Industry Analysis Marina Walsh. “This monthly improvement may be tied to several factors such as receipt of tax refunds and homeowner recovery from natural disasters. The labor market is relatively healthy, which is helping mortgage performance remain strong. However, compared to one year ago, there are fewer borrowers current on their mortgages. Also, more borrowers in loan workouts – particularly those with FHA loans – are having difficulty staying current.”