The share of mortgage loans in tolerance is declining

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According to the Mortgage Bankers Association, the number of loans subject to deferral across the country fell by 14 basis points to 3.26% of the portfolio of service companies as of August 8, 2021 from 3.40% in the previous week.

According to the latest MBA’s Patience and Calls survey released Monday, 1.6 million homeowners are on abstinence plans.

The share of loans to Fannie Mae and Freddie Mac in the deferral decreased by 5 basis points to 1.69%, while the share of loans to Ginnie Mae in the grace period decreased by 23 basis points to 3.95%.

Cancellation rates for portfolio loans and private label securities (PLS) declined 32 basis points to 7.05%. The share of deferred loans to independent servicing mortgage banks decreased by 17 basis points to 3.46%, while the percentage of deferred loans to servicing depositories fell by 13 basis points to 3.36%.

“The biggest drop in deferred loans over the month was due to the sharp increase in refusals as many homeowners approach the end of their abstinence period,” said Mike Fratantoni, MBA senior vice president and chief economist. “The abstinence rate has decreased for all categories of investors and service companies.”

He added that this week the number of new abstinence requests “increased slightly, especially with regard to Ginny Mae loans,” but the overall trend remains positive. The incoming data continues to support our forecast of an improvement in the labor market in the coming months. “

Other key findings from the MBA’s Tolerance and Calling Survey conducted August 2-8, 2021:

  • In stages, 9.7% of the total number of abstinence loans are in the initial abstinence plan stage, and 82.8% are in the renewal stage. The remaining 7.5% falls on abstinence re-entry.
  • The total number of weekly abstinence requests as a percentage of the service portfolio increased from 0.04% to 0.06% from the previous week.

Of the total withdrawals on abstinence for the period from June 1, 2020 to August 8, 2021:

  • 28.2% led to a delay / partial repayment of the loan.
  • 22.7% represented borrowers who continued to make monthly payments during the abstinence period.
  • 16.1% represented borrowers who did not meet all of their monthly payments and exited the grace period until they developed a loss mitigation plan.
  • 13.2% led to a recovery in which overdue amounts are refunded upon exiting the deferred payment.
  • 11.0% resulted in a change in the loan or a change in the trial loan.
  • As a result, 7.4% of the loans were paid off either through refinancing or through the sale of the home.
  • The remaining 1.4% resulted in repayment plans, short sales, bequests, or other reasons.

To read the full report, click here

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