Mortgage loans in forbearance continue to trickle down

The share of Ginnie Mae mortgages in forbearance rose to 1.32%, according to the report. Meanwhile, the percentage of Fannie Mae and Freddie Mac loans in forbearance decreased two basis points to 0.32%, and the forbearance share for portfolio loans and private-label securities (PLS) fell eight basis points to 1.26%.

“From January 2021 through May 2022, the Ginnie Mae forbearance rate was declining – albeit at a slower pace in 2022 compared to 2021,” Walsh explained. “In June and July this year, the rate stayed flat. Last month, Ginnie Mae new forbearance requests and re-entries outpaced forbearance exits, and there was a decline in post-forbearance workout performance among government loans. Despite this activity, the overall performance of the Ginnie Mae portfolio still improved to 94.57% current.”

Walsh warned that if the unemployment rate rises and the personal savings rate dwindles due to record-high inflation, pressures on portfolio performance and post-forbearance workout performance may be on the horizon – particularly for government loans.