Mortgage forbearance continues to affect borrowers and lenders alike in the current economic environment

According to recent data, the growth of mortgage forbearance has slowed overall, but Ginnie Mae mortgages are still seeing the highest levels of forbearance.

The data, collected by Black Knight, show that approximately 4.45 million homeowners actively remain in mortgage forbearance, representing 8.17% of all active mortgages. This is down from its peak of approximately 4.7 million and 8.49%, respectively, just two weeks ago. While forbearance plans continue to be offered and taken up by borrowers, the rate of growth is no longer increasing.

Breaking the data down further, it's clear that the most severe impacts of mortgage forbearance are being seen in Ginnie Mae mortgages. That portion accounts for 8.83% of all active mortgages, with roughly 2.3 million properties in forbearance. This is the highest percentage among loan types and is nearly double the rate of forbearance found in government-sponsored enterprise (GSE) loans.

That having been said, the GSE loans still have a comparatively higher number of forbearance cases. Between Fannie Mae and Freddie Mac, there are roughly 2.1 million mortgages in forbearance, making them the two largest servicers of these programs.

Meanwhile, private label securities (PLS) and portfolio loans saw a slight increase in forbearance numbers during the period of monitoring. PLS loans now have a forbearance rate of 5.81%, up slightly from 5.68% two weeks ago. Portfolio loans, meanwhile, have a forbearance rate that has gone up slightly to 3.93%.

Given the present situation, one might expect the rate of forbearance to rise further, but it doesn't appear that will be the case for the foreseeable future. As the economy slowly starts to open back up and an effective coronavirus vaccine is developed, more people will be able to return to work and pay off their mortgages.

In summary, while mortgage forbearance numbers are still quite high, the rate at which the numbers continue to grow has slowed significantly. Nevertheless, Ginnie Mae mortgages in particular are seeing the highest levels of forbearance, with 8.83% of all active mortgages in forbearance. Fannie Mae and Freddie Mac, while trailing behind in terms of the percentage of loans in forbearance, are still the two largest servicers of these programs. While the rate of forbearance growth appears to have plateaued for the moment, it remains to be seen if this trend will continue as the economy continues to recover from the effects of coronavirus.

This article was contributed on Aug 19, 2023