The latest weekly snapshot of our daily McDash Flash Forbearance Tracker shows the number of homeowners in active forbearance fell by 48,000 this week. As was the case last week, the decline was driven by January month-end forbearance plan expirations.
Improvement was seen across all investor classes, with portfolio-held and privately securitized mortgages making up the largest amount of the drop (-30,000 plans/-4.4%). Less improvement was seen in FHA/VA (-12,000; -1.1%) and GSE (-6,000; -0.7%) forbearances.
As of Feb. 9, 2.67 million (5% of) homeowners remain in forbearance, marking the first time forbearance volumes have fallen below the 2.7 million threshold since early April. Despite this good news, improvement remains muted, with average monthly declines of less than 2% since early December.
Also worth noting is the FHFA’s big announcement this week: borrowers in Fannie Mae/Freddie Mac forbearance plans may be eligible for an extension of up to three months, for a potential grand total of 15 months. This will have material impacts on the 907,000 homeowners currently in GSE forbearance plans, about 30% of whom were set to reach their 12-month expirations at the end of March.
Should Ginnie Mae follow suit and also extend FHA/VA forbearance limits to 15 months, at the current rate of improvement there would still be some 2.5 million homeowners in forbearance at the end of June when the first round of plans hit their new 15-month expirations.
Significant unknowns remain, one of which is the impact such extensions will have on the overall recovery. We’ve already seen evidence of forbearance starting to erode borrowers’ equity positions. Plus, the forbearance landscape itself continues to evolve. Black Knight will harness both our data as well as our industry experts to monitor the situation and report back on this blog weekly.