Blog Layout

Forbearance rate declined to just 1.18% in February In total, about 590,000 homeowners were in forbearance plans as of February 28

Didier Malagies • Mar 21, 2022


Servicers’ forbearance portfolio volume dropped in February for the 21st-consecutive month, with more borrowers current on their mortgage payments due to improvements in the economy and viable loss mitigation options.


The total number of loans in forbearance decreased by 12 basis points, from 1.30% in January to 1.18% in February, according to the Mortgage Bankers Association (MBA). In total, about 590,000 homeowners were in forbearance plans as of February 28. 


The most notable decline was in the portfolio loans and private-label securities (PLS) category, dropping by 30 basis points to 2.72%. Ginnie Mae-insured loans in forbearance decreased 10 basis points to 1.50% of servicers’ portfolio volume. Meanwhile, Fannie Mae and Freddie Mac-backed loans dropped by eight basis points to 0.56%.   


The survey included data on 36.4 million loans serviced as of February 28, 73% of the first-mortgage servicing market.


Marina Walsh, MBA’s vice president of industry analysis, said in a statement that “there were many positive results in overall mortgage performance” in February. 


“We can credit several factors to the improved performance, including the availability of viable loss mitigation options, low unemployment that is now below 4%, strong wage growth, and rising home equity,” Walsh said.


Total forbearance requests decreased two basis points to 0.16% of servicing portfolio volume in February, while exits decreased five bps to 0.23% of the total. The survey also shows that 30.1% of total loans were in the initial stage last month, and 57% were in a forbearance extension. The remaining 12.9% were re-entries.


The survey also shows that loans serviced not delinquent or in foreclosure were 94.94% in February, up from 94.91% in January, and 350 basis points higher than one year ago.


During the last 20 months, MBA’s data revealed that 29.2% of exits resulted in a loan deferral or partial claim. Also, 19.1% represented borrowers continued to pay during the forbearance period. However, 17% were borrowers who did not make their monthly payments also did not have a loss mitigation plan.

According to Walsh, there was some improvement in the performance of borrowers with existing loan workouts, which are solutions for restructuring debt, such as repayments, deferrals, or partial claims.

Total loan workouts from 2020 that were current increased from 82.26% in January to 82.78% in February, as a share of the total workouts in servicing portfolio. Walsh said this was the first improvement since June 2021.



“The three results – the lower forbearance rates and higher performance rates for both total borrowers and borrowers in workouts – are especially favorable given that there is typically a dip in mortgage performance in February because of the shortened number of days to make a payment,” Walsh said. rates, and are less likely to move as rates move higher — this does not bode well for housing supply.”



Start Your Loan with DDA today
Your local Mortgage Broker

Mortgage Broker Largo
See our Reviews

Looking for more details? Listen to our extended podcast! 

Check out our other helpful videos to learn more about credit and residential mortgages.

By Didier Malagies 04 Nov, 2024
 ender's 1% Down Payment program is designed to make homeownership more accessible for eligible first-time buyers by lowering the upfront costs typically required for a mortgage. Here's a breakdown of how the program generally works: How It Works 1% Down from the Borrower: The borrower contributes just 1% of the home purchase price as a down payment. 2% Contribution from Lender: Lender covers an additional 2% of the down payment, allowing the borrower to start with a total of 3% equity in the home. Eligibility: Borrowers must meet certain income and credit score requirements. The program often targets lower-income buyers or those who qualify for special financial assistance. Key Features and Benefits Low Entry Barrier: The reduced down payment can make homeownership achievable sooner for first-time buyers or those with limited savings. Conventional Loan: The loan is structured as a conventional mortgage, which may help borrowers avoid some of the restrictions associated with government-backed loans like FHA loans. Potential Mortgage Insurance: Depending on the loan details, borrowers may need to pay private mortgage insurance (PMI) until they reach 20% equity. Other Considerations Interest Rates: Rates and terms are subject to typical mortgage rate changes, so it's advisable to check the current rate before applying. Credit Requirements: There may be a minimum credit score requirement, though this is typically more flexible than for standard conventional loans. The 1% Down program can be an excellent option for buyers looking to make homeownership more affordable. tune in and learn at https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
By Didier Malagies 29 Oct, 2024
Roughly 16% of women workers are “very confident” that their retirement prospects will lead them to have a satisfactory lifestyle, illustrating that women remain at greater risk than men for achieving a sustainable retirement. This is according to a new survey-based report from the Transamerica Center for Retirement Studies. “Women have made great strides in educational attainment and access to career opportunities in recent decades,” Catherine Collinson, president and CEO of the Transamerica Institute, said in a statement. “Yet, despite this progress, women are still at greater risk than men of not achieving a financially secure retirement.” Longstanding challenges including a pay gap between men and women, as well as more time needed away from the workforce to adequately pa
By Didier Malagies 28 Oct, 2024
 The FHA 203(h) program is a Federal Housing Administration (FHA) loan specifically designed to help people affected by natural disasters, like hurricanes, purchase or rebuild a home. It provides an accessible way for victims of federally declared disaster areas to find stable housing quickly by offering favorable terms compared to traditional mortgages. Here’s a breakdown of how it works and its benefits: Key Features of the FHA 203(h) Loan Eligibility Requirements: You must be a homeowner or renter whose home was destroyed or severely damaged in a disaster within a federally declared disaster area. Typically, you need to apply within one year of the disaster declaration. Loan Coverage: You can use the FHA 203(h) to purchase a new primary residence or rebuild an existing one if your previous home was destroyed. It’s available for both single-family homes and approved condominiums. Benefits of the FHA 203(h) Program: No Down Payment Required: Unlike traditional FHA loans that require a 3.5% down payment, the 203(h) program allows qualified borrowers to finance 100% of the home’s cost, which can be helpful during times of financial stress. Lower Credit Score Flexibility: FHA loans generally have flexible credit requirements, and the 203(h) is no exception. The credit standards might be more accommodating due to the circumstances, though some lenders may impose their own minimum scores. Potential Waiver of Mortgage Insurance Premiums (MIP): Some lenders may waive upfront MIP payments under this program. However, it’s common for standard FHA loans to have monthly premiums. Refinance Option: If your damaged home needs repairs and you want to keep it, you can combine the FHA 203(h) with a 203(k) loan to finance both the purchase and repair costs. Loan Limits: The FHA 203(h) is subject to standard FHA loan limits, which vary by county and property type. Documentation: Lenders will require proof that you lived in the disaster area, typically through utility bills, lease agreements, or similar documents. You’ll also need proof of disaster loss, such as insurance claims, FEMA assistance documentation, or other relevant records. Steps to Apply Contact Lenders Familiar with FHA 203(h) Loans: Not all lenders offer this program, so find one experienced with disaster recovery loans. Gather Required Documentation: Make sure to have your identification, proof of residency in the disaster area, proof of loss, and any FEMA assistance documents. Consider FHA 203(k) Combination: If you want to buy a damaged home and repair it, discuss combining with an FHA 203(k) for renovation financing. Potential Drawbacks While the program is beneficial, keep in mind that: The loan amount is capped by FHA limits, which may not be enough in higher-cost areas. Mortgage insurance premiums can increase monthly payments, even if the upfront premium is waived. The FHA 203(h) can be a strong tool for those affected by natural disasters, providing quick access to housing and flexible financing terms at a time when resources might be limited. tune in and learn at https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
Show More
Share by: