HomeBlog HomeBlog Posts4.7M Homeowners Now in Forbearance, But Pace is Slowing Considerably

4.7M Homeowners Now in Forbearance, But Pace is Slowing Considerably

4.7M Homeowners Now in Forbearance, But Pace is Slowing Considerably

Black Knight has been tracking loan-level forbearance data via our McDash Flash daily data set and suite of solutions to provide the timeliest view of the impact of COVID-19 on the U.S. mortgage market.

We have enhanced our ability to identify even those loans in COVID-19-related forbearance that were not specifically coded as such by individual McDash contributors, giving us even greater visibility into the scope of the situation. This week’s numbers reflect this enhanced visibility.

The latest data from the McDash Flash Forbearance Tracker shows that as of May 12, approximately 4.7 million homeowners are in forbearance programs with their servicers, up from a revised 4.5 million one week prior.

Together, they represent 8.8% of the entire active mortgage universe, just over $1 trillion in unpaid principal, and account for 7% of all GSE-backed loans and 12.4% of FHA/VA loans.

However, the pace of growth in new forbearance plans has slowed considerably – there was an average net increase of just under 26,000 per day over the past week. That’s a reduction of more than 85% of the rate we saw back in early April.

Using a momentum-based approach based on the one-week average and assuming an optimistic 10% daily decline moving forward, we would see 4.9 million loans in forbearance by the end of May (9.2% of active mortgages) and just under 5 million (9.4%) by the end of June.

A more pessimistic scenario, in which the two-week average rolls forward and the 10% daily decline doesn’t manifest until June 15th, could result in as many as 5.4 million loans (10.1%) in forbearance by the end of the month, and nearly 6.3 million (11.8%) by the end of June.

Regardless of a borrower’s forbearance status, servicers of loans in government-backed securities must make advance principal and interest (P&I) payments as well as tax and insurance (T&I) payments each month for these loans.

At today’s level, mortgage servicers need to advance a combined $3.6 billion per month to holders of government-backed mortgage securities on COVID-19-related forbearances. That’s on top of the $1.5 billion in T&I payments they must make on behalf of borrowers each month. Another $2.1 billion in lost P&I will be faced each month by servicers of portfolio-held or privately securitized mortgages, as more than 9% of these loans are in forbearance as well.

The FHFA has said that P&I advance payments will be capped at four months for servicers of GSE-backed mortgages. Given today’s number of loans in forbearance, servicers of GSE-backed loans still face $8.8 billion in advances over that four-month period.

Black Knight will continue to provide weekly McDash Flash Forbearance Tracker updates via this blog. Those interested in staying up-to-date on industry developments are encouraged to visit the blog for more information in the coming days and weeks.