After last week’s not unexpected increase, our McDash Flash daily mortgage performance dataset shows the number of active forbearance plans has declined by 71,000 since last Tuesday, continuing a trend of strong early month declines.
As of August 3, 1.82 million homeowners remain in COVID-19-related forbearance plans, representing 3.4% of all active mortgages, including 2.0% of GSE, 6.0% of FHA/VA and 4.2% of loans held in bank portfolio and private securitizations.
Improvement was seen across the board. FHA/VA saw the greatest reduction with a 36,000 (-4.8%) decline in active plans. The number of GSE loans in forbearance fell by 18,000 (-3.2%) from the week prior and portfolio/PLS saw a 17,000 (-3%) decline.
That puts the number of active plans down 131,000 (-6.7%) from the same time last month, a slightly slower rate of improvement than in recent weeks. It’s less a slowdown in improvement than an indication of the stronger than average declines we saw last month as the initial wave of forbearance entrants went through their 15-month review process.
Indeed, the 121,000 plan exits since last Tuesday – up from just over 40,000 the prior week – made up only about half of what we saw in the first week of last month due to July’s much larger volumes of reviews.
Plan starts, including both new plans and restarts, pulled back this week, hitting their lowest weekly mark since early July. Of the plans reviewed over the past week, just under 60% were exits, with the other 40% being extended. That’s down from a 65-35 exit/extension ratio at the same time last month.
More than 340,000 plans are currently slated for review for extension/removal throughout August. An estimated one-third of those are set to reach their final expiration based on current allowable forbearance term lengths. Volumes of final expirations will increase significantly in September and October.
We will continue to monitor the very latest forbearance data from the McDash Flash dataset and report our findings each week on this blog. For monthly deep dives into the matter, be sure to look for our Mortgage Monitor report on the first Monday of every month.