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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 62 J O U R N A L June 2023 deterioration in the performance of post-for- bearance workouts," said Marina B. Walsh, CMB, MBA's VP of Industry Analysis. "About three out of four borrowers are remaining current on their post-forbearance workouts, but this is down from the average of four out of five borrowers that was relatively consis- tent in 2022 and into 2023." By stage, 34.4% of total loans in forbear- ance were in the initial forbearance plan stage, while 53.2% were in a forbearance extension. The remaining 12.4% were forbearance reen- tries, including reentries with extensions. Total loans serviced that were current (not delinquent or in foreclosure) as a percent of servicing portfolio volume (#) decreased to 95.89% in April 2023 from 96.35% in March 2023 (on a non-seasonally adjusted basis). "Overall servicing portfolios remain healthy, and some of the worsening monthly performance can be attributed to seasonal factors such as tax refunds that pushed up the March results and then normalized in April," Walsh said. "MBA's forecast calls for an economic slowdown and an increase in unemployment later this year and into 2024, which will impact loan performance." Of the cumulative forbearance exits for the period from June 1, 2020, through April 30, 2023, at the time of forbearance exit: » 29.6% resulted in a loan deferral/partial claim. » 18.0% represented borrowers who con- tinued to make their monthly payments during their forbearance period. » 17.7% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitiga- tion plan in place yet. » 16.1% resulted in a loan modification or trial loan modification. » 10.9% resulted in reinstatements, in which past-due amounts are paid back when exiting forbearance. » 6.5% resulted in loans paid off through either a refinance or by selling the home. » The remaining 1.2% resulted in repayment plans, short sales, deed-in-lieus or other reasons. Total completed loan workouts from 2020 and onward (repayment plans, loan deferrals/ partial claims, loan modifications) that were current as a percent of total completed work- outs decreased to 74.39% in April from 76.70% the previous month. Nationwide, the five states reporting the highest share of loans that were current as a percent of servicing portfolio include Wash- ington, Colorado, Idaho, Oregon, and Cal- ifornia. The five states reporting the lowest share of loans that were current as a percent of servicing portfolio include Louisiana, Mis- sissippi, New York, Indiana, and Alabama. The Bureau of Labor Statistics (BLS) reports that total nonfarm payroll em- ployment rose by 253,000 in April, and the unemployment rate changed little at 3.4%. Employment continued to trend up in pro- fessional and business services, healthcare, leisure and hospitality, and social assistance. Both the unemployment rate, at 3.4%, and the number of unemployed persons, at 5.7 million, changed little in April, as the unem- ployment rate has ranged from 3.4% to 3.7% since March 2022. Among the major worker groups, the unemployment rates for adult men (3.3%), adult women (3.1%), teenagers (9.2%), whites (3.1%), Blacks (4.7%), Asians (2.8%), and Hispanics (4.4%) showed little or no change in April. "A strong job market will boost earnings and household spending capacity, which is good for the housing market and broader economy," Realtor.com Chief Economist Danielle Hale added. "However, a too-strong market means the Fed has to tighten further, dampening that good news and running a higher risk of over-tightening. Today's report falls a bit above expectations, and may un- dermine some of the early-week confidence that a pause in rate hikes is ahead. Fortunate- ly, we have nearly another 6 weeks to go be- fore the next Fed meeting in which we'll see several more readings on the economy, infla- tion, and the job market. For home shoppers, this could mean somewhat higher mortgage rates ahead. But perhaps more importantly for home buyers and sellers, the labor market continues to support income-earning and consumer confidence, two necessary ingredi- ents for home sales to occur." "MBA's forecast calls for an economic slowdown and an increase in unemployment later this year and into 2024, which will impact loan performance." —Marina B. Walsh, CMB, VP of Industry Analysis, MBA