Total loans in forbearance fell for the 12th week in a row, according to the latest weekly survey from the Mortgage Bankers Association (MBA)
- Total loans in forbearance decreased by 3 basis points from the previous week to 4.19%.
- MBA estimates 2.1 million homeowners are in forbearance plans.
By stage, 11.8% of total loans in forbearance are in the initial stage, 82.9% are in a forbearance extensiion, and the remaining 5.3% are forbearance re-entries.
The re-entries did catch the attention of Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, who said in a statement, “Although the overall share is declining, there was another increase in forbearance re-entries. Currently, 5.3 percent of loans in forbearance are homeowners who had cancelled forbearance but needed assistance again.”
Megan Leonhardt at CNBC reported on who is most likely to be in these forbearance programs. “But those who remain in forbearance typically have lower credit scores and live in lower-income neighborhoods, making them more susceptible to losing their homes when these programs end later this year.” (CNBC)
It’s important to remember that regardless of what happens with the forbearance programs, this current situation is a far cry from the bubble of 2008. ATTOM Data Solutions latest equity report found that “just 2.6 million, or one in 21, mortgaged homes in the first quarter of 2021 were considered seriously underwater…” (ATTOM) In November 2009 CoreLogic reported “that almost 10.7 million, or 23 percent, of all residential properties, are ‘underwater.'”(NPR)
Assuming the worst case scenario happens, the current housing market is 4 million homes short of buyer demand. (WSJ) As horrible as it would be that 2.6 million homeowners would lose their homes. It would provide much-needed inventory to a market that is desperately asking for it.