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Forbearances Down 1 Million From Peak

Forbearances Down 1 Million From Peak

After holding flat for the last couple of weeks, the total number of mortgages in active forbearance saw stronger than expected improvement, with the number of active forbearance plans declining by 147k (-4%) over the past week.

According to Black Knight’s McDash Flash Forbearance Tracker, active forbearances are now down about 1M (-21%) since the peak in May. Overall ,COVID-19-related forbearance levels continue to improve, albeit slowly and in somewhat of a stairstep manner.

As of September 1, 3.8M mortgages remain in active COVID-19 related forbearance plans, representing 7.1% of all active mortgages, down from 7.4%. Together, they represent $804 billion in unpaid principal. Of these, 75% have had their terms extended.

The decline was primarily driven by portfolio-held loans, which fell by 75K this week, along with GSE mortgages which saw a 49K decline in the number of active forbearance plans. FHA/VA loans saw a more modest weekly decline at -23K.

Some 5.1% of all GSE-backed loans and 11.5% of all FHA/VA loans are currently in forbearance plans. Another 7.5% of loans in private label securities or banks’ portfolios are also in forbearance.

Over the past 30 days, active forbearances have declined by 171K (-4%), with the strongest improvement again among GSE loans (-128K, -8%). More modest improvements have been seen among both FHA/VA forbearances (-23K, -2%) and private/portfolio loans (-20K, -2%).

As we covered in the most recent Mortgage Monitor report, forbearance starts have shown little impact from the reduction in expanded unemployment benefits thus far.

Through the first four weeks of August, forbearance starts were down 13% M/M from the comparable 4-week period in July. September may provide the true test, though, as impacted borrowers were still receiving full expanded unemployment benefits up through July 31.

More than 2M COVID-19-related forbearance plans are now set to expire in September, setting up a significant volume of extension/removal activity in late September/early October, reminiscent to what was seen in late June and early July, albeit to a slightly lesser degree.

Over the past month, roughly 500K borrowers exited COVID-19-related forbearance plans, while just over 500K had their plans extended, a nearly 50/50 blend of extensions vs. removals.

The ongoing COVID-19 pandemic continues to represent significant uncertainty for the weeks ahead. Black Knight will continue to monitor the situation and report our findings on this blog.