Tolerance indicators have not changed as relief for some borrowers will end soon



Service professionals are gearing up for what they expect to be an active September as the slow pace of August has led to some changes in mid-month abstinence rates.

Mortgages remaining in COVID-19 abstinence plans accounted for 3.25% of total for second week in a rowbased on MBA’s weekly Tolerance and Calling Survey, August 16-22. That’s roughly 1.6 million homeowners. Of this amount, 3.5% was held by independent mortgage bankscompared with 3.48% in the previous week, while the share of bad loans in depository institutions remained at 3.35% compared to the previous week.

However, more fluctuations are expected, according to Mike Fratantoni, MBA senior vice president and chief economist.

“We expect a sharp increase in loan refusals next month as many borrowers hit the 18-month mark and see their abstinence plans complete,” he said in a press release.

In the first few weeks that homeowners were offered protection against coronavirus under the CARES Act last year, requests for abstention from punishment rose. more than ten times… Those thousands who were granted a grace period in March 2020 and are still retaining the grace period will begin to see this benefit expire in the coming weeks.

The August data could provide a hint of what the numbers might bring next month. “For those borrowers who left in August, most either introduce deferral plans or receive changes,” Fratantoni said.

Among the loans that were already dropped due to deferred payment in the period from June 1, 2020 to August 22, 2021, 28.3% of them were on deferral or partial repayment, and 22.5% belonged to borrowers who made regular payments during the grace period. Another 16% exited without a plan to reduce losses, and 13.1% were recovered. The loan modifications resulted in 11.2% of homeowners giving up on deferred payments, and 7.5% of exits were the result of either refinancing or selling the property. The remaining 1.4% ended with repayment plans, short sales or replacements.

Shares of tolerance with secondary mortgage lenders also remained largely unchanged. The number of issued mortgages secured by Jeannie Mae remained at the level of 3.92% of the volume for the week, while the mortgages of Fannie Mae and Freddie Mac also remained unchanged at 1.66%. Problem loans held by portfolio lenders and private label securities rose three basis points to 7.18% from 7.15% in the previous week.

Of the current problem borrowers, 10.2% are at the initial stage of deferred repayment, and 81.7% are on the extension. Renewed tolerance accounted for 7.7% of all abstinence plans.

Demands for deferred payments as part of the total volume of services remained unchanged during the week at 0.5%, while the share of call center activity fell by a full percentage point to 6.3% from 7.3% in the previous week.

MBA research data represent approximately 74%, or 36.9 million loans, of the primary mortgage market per week. Ginny Mae-backed mortgages accounted for 25.1% of serviced loans, with 56.4% guaranteed by either Fannie Mae or Freddie Mac. The remaining 18.5% was in the PLS / portfolio segment.


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