Mortgage forbearance rates improve despite higher delinquencies
"The results on mortgage performance are welcome news"
Mortgage forbearances were down across the board in February, with the total number of loans currently in forbearance plans declining four basis points from January, according to the Mortgage Bankers Association.
MBA reported Monday that 300,000 homeowners are in forbearance plans, representing 0.60% of servicers’ portfolio volume as of February 28. The improvement comes as the national delinquency rate jumped 51 basis points to 3.69% in the fourth quarter of 2022.
“The February results on mortgage performance is welcome news, given recent increases in delinquencies for other credit types such as credit cards and auto loans,” said Marina Walsh, MBA’s vice president of industry analysis. “However, with the possibility of a recession this year, we may see some deterioration in performance – particularly for government loans.”
The percentage of Fannie Mae and Freddie Mac loans in forbearance dropped two basis points to 0.28%, while Ginnie Mae loans in forbearance fell nine basis points to 1.28%. The forbearance share for portfolio loans and private-label securities (PLS) edged down five basis points to 0.78%.
“The forbearance rate decreased for both independent mortgage bank and depository servicers across all investor types in February,” Walsh said in a statement. “Even with the fewer days in the month – which often causes a drop in timely monthly payments – overall servicing portfolio performance declined only slightly to 95.8%, while performance of post forbearance workouts stayed essentially flat at 76%.”"The results on mortgage performance are welcome news"
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