WASHINGTON–The total number of mortgages in forbearance decreased in May. According to the Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey, loans now in forbearance decreased from 0.94% of servicers’ portfolio volume in the prior month to 0.85% as of May 31.
The MBAs estimate shows 425,000 homeowners are in forbearance plans.
In addition, the data show the share of Fannie Mae and Freddie Mac loans in forbearance decreased five basis points to 0.38%. Moreover, Ginnie Mae loans in forbearance decreased four basis points to 1.25%, while the forbearance share for portfolio loans and private-label securities (PLS) declined 29 basis points to 1.86%.
‘Whittling Away’
“Servicers are whittling away at the remaining loans in forbearance, even as the pace of monthly forbearance exits slowed in May to a new survey low,” said MBA VP-Industry Analysis Marina Walsh in a statement. “Most borrowers exiting forbearance are moving into either a loan modification, payment deferral, or a combination of the two workout options.
“It is a positive sign to see the overall servicing portfolio performance reach 95.85% current in May – 21 basis points higher than April’s figures,” Walsh continued. “However, it is worth watching if the rapid increase in interest rates for all loans, combined with inflation that is outpacing wage growth, complicates post-forbearance workout options and puts additional pressure on borrowers in existing post-forbearance workouts.”