Forbearances hold steady as exits slow

Didier Malagies • January 26, 2021

Forbearances hold steady as exits slow







The U.S. forbearance rate held relatively steady last week, rising one basis point to 5.38% of servicers’ portfolio volume, according to a survey from the Mortgage Bankers Association released on Monday.

The virtually unchanged rate of forbearance volume can be attributed to a stalemate between steady declines in almost every investor class and a whopping 26 basis point jump in portfolio loans and private-label securities, bringing their forbearance share to 8.94%.


Fannie Mae and Freddie Mac, on the other hand, once again claimed the smallest forbearance rate at 3.11% while Ginnie Mae loans in forbearance, which include loans backed by the Federal Housing Administration, fell 6 basis points to 7.61%.


“The good news is that the forbearance numbers for GSE loans continues to decline more consistently, as these borrowers typically have stronger credit and more stable employment,” said Mike Fratantoni, MBA’s senior vice president and chief economist.


Starting Nov. 2, the MBA began reporting the number of borrowers who continued to make their monthly payments during their forbearance period and have since exited. Since that date, the MBA has revealed that the number of up-to-date borrowers has consistently dropped, and Fratantoni noted the rate of exits from forbearance also slowed in the week prior.


In today’s low-inventory environment, complicated by external factors such as forbearance and foreclosure moratoriums, it’s crucial for real estate agents and brokers to be proactive in order to grow their business.

Presented by: PopStream

 

Data analytics company Black Knight noted that last week’s sluggish forbearance removals were the second lowest weekly removal volume observed to date since the company began monitoring the situation in April. 


“Removal rates have also slowed noticeably following the six-month point of forbearance plans,” said Andy Walden, director of market research for Black Knight. “This suggests that those borrowers who remain in forbearance were likely more heavily impacted by the economic downturn and thus are less likely to leave such plans before the full allowable 12-month period runs down.” 


Of the cumulative forbearance exits for the period from June 1, 2020 through Jan. 17, 2021, 28.7% represented borrowers who continued to make their monthly payments during their forbearance period – a one basis point drop, according to the MBA.


During that same time period, those who exited without a loss mitigation plan in place also fell slightly to 13.4% from 13.5% the week prior.


The MBA once again estimates there are now 2.7 million Americans in some form of forbearance, and that number has remained unchanged for nearly two months.


According to a recent paper from researchers at the business schools of Columbia University, Northwestern University, Stanford University, and the University of Southern California, by October 2020, debt

forbearance allowed U.S. consumers to miss about $43 billion of debt payments. If trends continue, more than 60 million consumers would miss about $70 billion of their debt payments by the end of the first quarter of 2021.




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.

what other income can be used besides tax returns

By Didier Malagies • October 13, 2025
Here are alternative ways to qualify for a mortgage without using tax returns: 🏦 1. Bank Statement Loans How it works: Lenders review 12–24 months of your business or personal bank statements to calculate your average monthly deposits (as income). Used for: Self-employed borrowers, business owners, gig workers, freelancers. What they look at: Deposit history and consistency Business expenses (they’ll apply an expense factor, usually 30–50%) No tax returns or W-2s required. 💳 2. Asset Depletion / Asset-Based Loans How it works: Instead of income, your assets (like savings, investments, or retirement funds) are used to demonstrate repayment ability. Used for: Retirees, high-net-worth individuals, or anyone with substantial savings but limited current income. Example: $1,000,000 in liquid assets might qualify as $4,000–$6,000/month “income” (depending on lender formula). 🧾 3. P&L (Profit and Loss) Statement Only Loans How it works: Lender uses a CPA- or tax-preparer-prepared Profit & Loss statement instead of tax returns. Used for: Self-employed borrowers who can show business income trends but don’t want to use full tax documents. Usually requires: 12–24 months in business + CPA verification. 🏘️ 4. DSCR (Debt Service Coverage Ratio) Loans How it works: Common for real estate investors — qualification is based on the property’s rental income, not your personal income. Formula: Gross Rent ÷ PITI (Principal + Interest + Taxes + Insurance) DSCR ≥ 1.0 means the property “covers itself.” No tax returns, W-2s, or employment verification needed. 💼 5. 1099 Income Loan How it works: Uses your 1099 forms (from contract work, commissions, or freelance income) as income documentation instead of full tax returns. Used for: Independent contractors, salespeople, consultants, etc. Often requires: 1–2 years of consistent 1099 income. Higher down payment and interest rate required. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329 

Now offering a 3rd Mortgage

By Didier Malagies • October 6, 2025
A third mortgage is an additional loan secured by the same property after a first and second mortgage already exist. It’s essentially a third lien on the property, which means it’s in third place to be repaid if the borrower defaults — making it riskier for lenders. Because of this higher risk, third mortgages typically: Have higher interest rates, Offer smaller loan amounts, and Require strong borrower profiles or solid property equity. 🤖 How AI Is Transforming 3rd Mortgage Lending AI tools can make offering third mortgages much more efficient and lower-risk by handling the data-heavy analysis that used to take underwriters days. Here’s how: 1. AI-Powered Lead Generation AI platforms identify homeowners with significant equity but limited cash flow — ideal candidates for third liens. Example: AI scans property databases, loan records, and credit profiles to spot someone with 60–70% total combined LTV (Loan-to-Value). The system targets those borrowers automatically with personalized financing offers. 2. Smart Underwriting AI underwriters use advanced algorithms to evaluate: Combined LTV across all liens, Income stability and payment history, Real-time credit behavior, Local property value trends. This allows the lender to make quick, data-backed decisions on small, higher-risk loans while keeping default rates low. 3. Dynamic Pricing AI adjusts rates and terms based on real-time risk scoring — similar to how insurance companies use predictive pricing. For example: Borrower A with 65% CLTV might get 10% APR. Borrower B with 85% CLTV might see 13% APR. 4. Automated Servicing and Risk Monitoring Post-funding, AI tools can monitor the borrower’s financial health, detect early signs of distress, and even suggest restructuring options before default risk rises. 💡 Why It’s Appealing Opens a new revenue stream for lenders and brokers, Meets demand for smaller equity-tap loans without refinancing, Uses AI automation to keep costs low despite higher credit risk, Attracts tech-savvy borrowers seeking quick approvals. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329

Always look at the 10 year treasury

By Didier Malagies • September 29, 2025
Great question — the 10-year U.S. Treasury Note (T-Note) is one of the most important benchmarks in finance, and it’s tightly linked to interest rates. Here’s a breakdown of how it works and why it matters: 1. What the 10-Year Treasury Is It’s a bond issued by the U.S. government with a maturity of 10 years. Investors buy it, loaning money to the government in exchange for: Semiannual coupon payments (interest), and The face value back at maturity. Because it’s backed by the U.S. government, it’s considered one of the safest investments in the world. 2. Yield vs. Price The yield is the effective return investors earn on the bond. The yield moves inversely with the bond’s price: If demand is high and price goes up → yield goes down. If demand falls and price goes down → yield goes up. 3. Connection to Interest Rates The 10-year Treasury yield reflects investor expectations about: Future Federal Reserve policy (Fed funds rate). Inflation (higher inflation expectations push yields higher). Economic growth (slower growth often pushes yields lower). While the Fed directly controls only the short-term Fed funds rate, the 10-year yield is market-driven and often moves in anticipation of where the Fed will go. 4. Why It’s So Important Mortgage rates & lending costs: 30-year mortgage rates generally move in step with the 10-year yield (plus a spread). If the 10-year goes up, mortgage rates usually rise. Benchmark for global finance: Companies, governments, and banks often price loans and bonds based on the 10-year yield. Risk sentiment: Investors flock to Treasuries in times of uncertainty, driving yields down (“flight to safety”). 5. Practical Example Suppose the Fed raises short-term rates to fight inflation. Investors expect tighter policy and possibly lower inflation later. If they believe inflation will fall, demand for 10-years might rise → yields drop. But if they fear inflation will stay high, demand falls → yields rise. Mortgage rates, business loans, and even stock valuations all adjust accordingly. ✅ In short: The 10-year Treasury is the bridge between Fed policy and real-world borrowing costs. It signals market expectations for growth, inflation, and Fed moves, making it a crucial guide for interest rates across the economy. tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329 
Show More