MReport May 2022

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M R EP O RT | 41 SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T Number of Loans in Forbearance Approaches the 1% Mark After peaking at 4.3 million at the height of the pandemic in June 2020, nearly two years later, an estimated 525,000 U.S. homeowners remained in forbearance plans in March. N ationwide, the number of loans in forbearance decreased by 13 basis points from 1.18% of servicers' portfolio volume the prior month to just 1.05% as of March 31, 2022. According to the Mortgage Bankers Association's (MBA) monthly Loan Monitoring Survey, an estimated 525,000 U.S. homeowners are currently in forbearance plans. "March was another month of lower forbearance rates, and a higher share of overall loans and forbearance-related work- out loans that are current," said Marina Walsh, CMB, MBA's VP of Industry Analysis. "The share of loans in forbearance contin- ues to dwindle and is just five basis points shy of hitting 1%—or 500,000 homeowners—after peaking at 4.3 million borrow- ers in June 2020. It has been a remarkable recovery for many homeowners in less than two years." By loan type, the share of Fannie Mae and Freddie Mac (GSE) loans in forbearance de- creased seven basis points from 0.56% to 0.49%, while Ginnie Mae loans in forbearance decreased 12 basis points from 1.50% to 1.38%. The forbearance share for portfolio loans and private-label securities (PLS) declined 28 basis points from 2.72% to 2.44%. By stage, 29.7% of total loans in forbearance are in the initial forbearance plan stage, while 57.2% are in a forbearance exten- sion. The remaining 13.1% are forbearance re-entries, including re-entries with extensions. Despite inflationary concerns and the rise in rates, modest im- provements in the employment sector are supporting the rise in forbearance exits, as the U.S. Department of Labor reported that the advance seasonally adjusted insured unemploy- ment rate was 1.1% for the week ending April 2, unchanged from the previous week's rate. The advance number for seasonally adjusted insured unemployment during the week ending April 2 fell to 1,475,000, a decrease of 48,000 from the previous week's unrevised level of 1,523,000. The four-week average was 1,511,500, a decrease of 29,750 from the pre- vious week's unrevised average of 1,541,250. Of the cumulative forbearance exits for the period from June 1, 2020, through March 31, 2022, at the time of forbearance exit: • 29.2% resulted in a loan defer- ral/partial claim. • 18.9% represented borrowers who continued to make their monthly payments during their forbearance period. • 17.1% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet. • 15.4% resulted in a loan modi- fication or trial loan modifica- tion. • 11.4% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance. • 6.7% resulted in loans paid off through either a refinance or by selling the home. • The remaining 1.3% resulted in repayment plans, short sales, deed-in-lieus, or other reasons. By region, the five states with the highest share of loans that were current as a percent of ser- vicing portfolio included: Idaho, Washington, Colorado, Utah, and Oregon. Conversely, the five states recording the lowest share of loans that were current as a percent of servicing portfo- lio were Louisiana, Mississippi, New York, West Virginia, and Oklahoma.

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