In the early stages of the pandemic, when job losses were skyrocketing across the country, millions of homeowners asked for forbearance on their mortgages, which they were allowed to do under the CARES Act.
In a forbearance, a borrower is able pause their mortgage payments due to a financial hardship. The hardship, in this case, was the nationwide shutdowns that were enacted to try to slow the spread of COVID-19.
But now, even as COVID-19 cases are on the rise, the number of borrowers in forbearance is steadily declining.
According to new data from the Mortgage Bankers Association, approximately 2.9 million homeowners are currently in forbearance, a decline of roughly 100,000 homeowners from the previous week.
Per MBA’s data, approximately 5.83% of the loans in mortgage servicers’ portfolios are in forbearance, down from 5.9% the previous week.
According to the MBA, the share of Fannie Mae and Freddie Mac loans that are in forbearance decreased for the 21st straight week, falling to 3.66% from 3.72%. Ginnie Mae loans in forbearance fell to 8.13% from 8.17%, while the share of portfolio loans and private-label securities in forbearance declined from 8.9% to 8.82%.
"With more borrowers exiting forbearance in the prior week, the share of loans in forbearance declined across all loan types. Almost half of forbearance exits to date have been from borrowers who remained current while in forbearance, or who were reinstated by paying back past-due amounts," said Mike Fratantoni, MBA's senior vice president and chief economist.
"The share of loans in forbearance has returned to levels last seen in early April, but it still remains remarkably high,” Fratantoni added. “Further improvement will require ongoing recovery in the job market, as well as additional fiscal stimulus."