Chat
Chat with Sales Hours: Monday-Friday 8:30 a.m. - 4:30 p.m. (CST)
Contact Sales
Call Sales Toll-Free 1-(866) 774-3282 Hours: Monday-Friday 7 a.m. - 5 p.m. (CST)
Product Login
Product Log-in
Product Support
Product Support
Email Sales
Contact Sales
After Hours
  • Support
  • Sign In Sign In
  • AUS NZ UK
CoreLogic - Home
  • Solutions
    view solutions by:

    Data Solutions

    • Lead Generation
    • Property Data
    • Location Intelligence

    Real Estate

    • Multiple Listing Enterprise
    • Agent & Broker

    Mortgage

    • Origination
    • Servicing
    • Appraisal
    • Commercial Property Tax

    Insurance

    • Hazard Risk
    • Catastrophe Risk Management
    • Risk Evaluation
    • Underwriting Automation
    • Weather
    • Claims Automation
    • Restoration
    • INTRCONNECT

    Mortgage Lenders

    • Origination

    Mortgage Servicers

    • Residential Property Tax
    • Default & Loss Mitigation
    • Portfolio Insight & Monitoring

    Mortgage Appraisers

    • Appraisal

    Real Estate Agents & Brokers

    • Agents & Brokers

    Real Estate MLS

    • Multiple Listing Enterprises

    Commercial Real Estate Owners

    • Commercial Property Tax

    Marketing Departments

    • Property Data

    Insurance Underwriters

    • Risk Evaluation
    • Underwriting Automation
    • Hazard Risk
    • Catastrophe Risk Management

    Insurance Risk Managers

    • Risk Evaluation
    • Hazard Risk
    • Catastrophe Risk Management

    Insurance Claims

    • Claims Automation
    • Restoration Contractors
    • Weather Verification

    Construction Contractors

    • Restoration Contractors

    General

    • Location Intelligence
    • Lead Generation
    • Data Solutions
  • Resources

    Reports

    • Climate Change
    • Construction Cost Update
    • Construction Insights
    • Home Price Insights
    • Homeowner Equity Insights
    • Loan Performance Insight
    • Mortgage Fraud
    • Property Tax Delinquency
    • Single-Family Rent Index

    Insight Blogs

    • Hazard HQ
    • Office of Chief Economist
    • Affordable Housing
    • Homebuying
    • Insurance
    • Other Articles

    More Resources

    • Events
    • Case Studies
    • White Papers
    • Podcasts
    • Quick Takes
  • Company
    • About
    • Leadership
    • Newsroom
    • Contact
    • Careers
  • Search
CoreLogic - Home
  • Solutions
  • Resources
  • Company

    • About
    • Leadership
    • Newsroom
    • Contact
    • Careers
  • Accounts

    • Products Sign-in
  • Contact

    • Sales Contact
    • Product Support
  • Regions

    • Australia
    • New Zealand
    • United Kingdom
  • Social

    • Facebook
    • Instagram
    • Linkedin
    • Twitter
    • Youtube
Solutions
VIEW BY:
  • Data Solutions

    • Lead Generation
    • Property Data
    • Location Intelligence
  • Real Estate

    • Multiple Listing Enterprise
    • Agent & Broker
  • Mortgage

    • Origination
    • Servicing
    • Appraisal
    • Commercial Property Tax
  • Insurance

    • Hazard Risk
    • Catastrophe Risk Management
    • Risk Evaluation
    • Underwriting Automation
    • Weather
    • Claims Automation
    • Restoration
    • INTRCONNECT
  • Mortgage Lenders

    • Origination
  • Mortgage Servicers

    • Residential Property Tax
    • Default & Loss Mitigation
    • Portfolio Insight & Monitoring
  • Mortgage Appraisers

    • Appraisal
  • Real Estate Agents & Brokers

    • Agents & Brokers
  • Real Estate MLS

    • Multiple Listing Enterprises
  • Commercial Real Estate Owners

    • Commercial Property Tax
  • Marketing Departments

    • Property Data
  • Insurance Underwriters

    • Risk Evaluation
    • Underwriting Automation
    • Hazard Risk
    • Catastrophe Risk Management
  • Insurance Risk Managers

    • Risk Evaluation
    • Hazard Risk
    • Catastrophe Risk Management
  • Insurance Claims

    • Claims Automation
    • Restoration Contractors
    • Weather Verification
  • Construction Contractors

    • Restoration Contractors
  • General

    • Location Intelligence
    • Lead Generation
    • Data Solutions
Resources
  • Reports

    • Climate Change
    • Construction Cost Update
    • Construction Insights
    • Home Price Insights
    • Homeowner Equity Insights
    • Loan Performance Insight
    • Mortgage Fraud
    • Property Tax Delinquency
    • Single-Family Rent Index
  • Insight Blogs

    • Hazard HQ
    • Office of Chief Economist
    • Affordable Housing
    • Homebuying
    • Insurance
    • Other Articles
  • More Resources

    • Events
    • Case Studies
    • White Papers
    • Podcasts
    • Quick Takes

Home / Intelligence / Blogs / Office of the Chief Economist / Forbearance Rate Rises With Loan Credit Risk

ABOUT THE AUTHOR
Archana Pradhan
Archana Pradhan
Principal, Economist, Office of the Chief Economist
View Profile
  • February 7, 2022

Forbearance Rate Rises With Loan Credit Risk

Evidence from Mortgage Loans originated during 2018-2020

Since March 2020, the COVID relief program under the CARES Act allowed millions of homeowners to temporarily pause or reduce their mortgage payments.[1] However, for many of these homeowners, the forbearance plans already expired or are expiring soon. The maximum forbearance period was 18 months for most of the programs. Thus, a loan that entered forbearance during April 2020 would have had to exit forbearance no later than October 2021. According to the Mortgage Bankers Association (MBA), the share of mortgage loans in forbearance decreased to 1.41% in December 2021, a drop of 26 basis points from 1.67% in the prior month.

The CoreLogic data shows that the forbearance rates were higher for higher-priced loans.[2] In this blog, we examine the forbearance rate by APR (Annual Percentage Rate) and Average Prime Offer Rate (APOR) spread for all conventional loans. APOR is a weekly market index of the average loan APRs offered by a selection of lenders across several mortgage products offered to highly qualified borrowers.[3] The difference between a loan’s APR and the APOR is referred to as the “rate spread.” In general, loans with a rate spread of 1.5 percentage points or more are considered higher-priced loans.

As forbearance and delinquency are highly correlated, the finding is consistent with our prior analysis. Our previous analysis had shown that loan delinquency increased as rate spread increased. Figure 1 displays forbearance rates for conventional loans for vintage years 2018-2020.[4] The forbearance rates in the figure are displayed by rate spread category, in increments of 0.25 percentage points. The figure shows that the forbearance rate was lowest for loans with a rate spread of 0% – 0.25% and highest for the loans with rate spreads above 2%, based on servicing data through November 2021. There were notable increases in forbearance as rate spreads increased. Especially, the variation in forbearance rates is depicted between the loans with 1.25% – 1.49% and 1.50% – 1.74% rate spread categories. The forbearance rate for loans with 1.50% – 1.74% rate spread is higher by 2 to 3 percentage points than the loans with 1.25% – 1.49% rate spread.

Figure 1: Forbearance Rate by Spread Above APOR and Vintage: Conventional Loans Active as of November 31, 2021

Cumulative forbearance rates of 9%, 8%, and 2% for vintage year 2018, 2019 and 2020, respectively[5]
Figure 1: Forbearance Rate by Spread Above APOR and Vintage: Conventional Loans Active as of November 31, 2021
Source: 2018-2020 Merged CoreLogic LLMA and HMDA Data
© 2022 CoreLogic,Inc., All rights reserved.

Higher-priced loans were more likely to experience forbearance than lower rate spread loans in this analysis. However, not all forbearance loans are in some form of delinquency. About 54% of the homeowners with conventional loans in active forbearance plans in November 2021 were current on their mortgage payments. Some homeowners may have applied for forbearance in case their financial hardship worsened even though they were able to remain current in their payments.

A surge in foreclosures as the forbearance plan ends is unlikely. As reported by CoreLogic, the foreclosure inventory rate was at a 22-and-a-half-year low of 0.2% in October 2021, down from 0.3% in October 2020.[6] The very rapid home price appreciation in 2020 – 2021 has boosted  home equity. Record levels of home equity will help limit the number of homeowners that experience foreclosure.

© 2022 CoreLogic,Inc., All rights reserved.

[1] The Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law March 27, 2020, and its forbearance provisions cover the federally backed mortgage lending programs (Fannie Mae, Freddie Mac, FHA, VA, RHS). A borrower with a federally backed mortgage loan experiencing a financial hardship due to the COVID–19 emergency may request forbearance; forbearance shall be granted for up to 180 days and shall be extended for an additional period of up to 180 days at the request of the borrower. Homeowner’s credit score will not be impacted during the forbearance period despite the missed/late payments.  Federal regulators extended the forbearance period to a maximum of 18 months.

[2] CoreLogic Loan-Level Market Analytics (LLMA) data was merged with 2018-2020 HMDA data by employing a unique matching technique that linked LLMA loan performance data to HMDA origination data. The match was based on loan characteristics, such as the loan amount, the loan purpose, the loan type, census tract, origination year, and the lender identity key. The overall match rate was about 50% of the LLMA data. Forbearance status of loans were tracked up to the month of November 2021. We include both purchase and refinance loans in our analysis to provide a comprehensive review. Rate spread below 1.5% was not provided in HMDA data prior to 2018. Thus, we just include loans originated in 2018-2020.

[3] See CFPB website What is a “higher-priced mortgage loan?” | Consumer Financial Protection Bureau (consumerfinance.gov)

[4] Forbearance rate is the percent of active loans in November 2021 that had been in forbearance at some point (even if current in November 2021), out of the total number of loans originated for that vintage year, including those that had been paid off.

[5] Cumulative forbearance rate is the forbearance rate for all conventional loans by vintage year. The forbearance rates were much lower for the 2020 vintage as the loan applicants who were approved for a mortgage loan after March 2020 had not lost their job or business because of the pandemic. They still had a stable job and sufficient income to be approved.

[6] The foreclosure inventory rate is the share of mortgages in some stage of the foreclosure process.

  • Category: Blogs, Intelligence, Office of the Chief Economist
  • Tags: Forbearance, Market Trends, Real Estate
ABOUT THE AUTHOR
Archana Pradhan
Archana Pradhan
Principal, Economist, Office of the Chief Economist
View Profile

Related Posts

CSI_Promo_Mar2023
Blogs

US CoreLogic S&P Case-Shiller Index Gain Slows to Pre-Pandemic Low, Up by 3.8% Year Over Year in January

The index continued to decline year over year in January, again posting a single-digit gain.

March 28, 2023
Tornado footprints in Southern California captured by CoreLogic's weather verification technology as viewed in CoreLogic Reactor™.
Blogs

A Rare Los Angeles Tornado and Near Hurricane-Force Winds in San Francisco

CoreLogic Weather Verification Services captured wind and tornado footprints from the severe weather system in California.

March 24, 2023
atmospheric rivers california
Core Conversations

What Was it Really Like to Live Through the California Floods? Our Team Spills

A Conversation With Kent David and Tom Larsen Since the beginning of the year, California has been drenched by atmospheric rivers. The flooding in California

March 22, 2023

About Corelogic

  • Newsroom
  • Leadership
  • Careers
  • Ethics & Compliance

Accounts

  • Products Sign-in

Contact

  • Sales Contact
  • Product Support

Regions

  • CoreLogic Australia
  • CoreLogic New Zealand
  • CoreLogic UK

Follow & Connect

  • Facebook
  • Instagram
  • Linkedin
  • Twitter
  • YouTube
© 2023 CoreLogic. All rights reserved.
  • Legal
  • Privacy Policy
  • CCPA
  • Cookie Preferences
  • Security
  • Sitemap
  • Accessibility
  • Legal
  • Privacy Policy
  • CCPA
  • Cookie Preferences
  • Security
  • Sitemap
  • Accessibility