WASHINGTON–While overall mortgage performance improved in March, borrowers with Federal Housing Administration (FHA) loans continue to struggle, the latest Loan Monitoring Survey from the Mortgage Bankers Association (MBA) reveals.
The MBA data show that as of March 31, 0.36% of mortgage loans were in forbearance, down from 0.38% in February, which translates to about 180,000 homeowners still in active plans, the MBA said.
It added that since the start of the pandemic, servicers have handled roughly 8.6 million forbearance cases.
“Overall mortgage performance improved in March, with more borrowers making their mortgage payments and fewer borrowers in forbearance and loan workouts compared to the prior month,” Marina Walsh, vice president of industry analysis at MBA, said in a statement.
Walsh linked the improvement to seasonal factors that include tax refunds and recovery from natural disasters.
Deeper Signs of Stress
But she also said in her statement that deeper signs of stress are apparent, especially among government-backed borrowers.
“The labor market is relatively healthy, which is helping mortgage performance remain strong,” she said in MBA report. “However, compared to one year ago, there are fewer borrowers current on their mortgages. Also, more borrowers in loan workouts – particularly those with FHA loans – are having difficulty staying current.”
What Data Show
According to the report:
- While forbearance rates declined across the board, Fannie Mae and Freddie Mac loans fell to 0.13%, Ginnie Mae (including FHA/VA) dipped to 0.83%, and portfolio/private-label securities (PLS) dropped to 0.33% – the performance of FHA loans after loan modifications is worsening.
- Of all completed workouts since 2020, only 67.83% were current as of March, a modest improvement from February’s 66.36% but still over 7.5 percentage points lower than the same time last year.
Program Ends
As the CU Daily reported earlier, the Trump administration has also said it will end FHA’s COVID-era mortgage assistance program by September, an effort originally launched in 2020 and later extended by the Biden administration.
The policy allowed FHA to front payments on behalf of distressed borrowers, but critics now argue that it’s propping up unsustainable loans and delaying the return of needed housing inventory to the market.
