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Forbearances Down 24% from Peak

Forbearances Down 24% from Peak

The pace of improvement in the number of mortgages in active forbearance increased this week, as the number of plans fell 95K over the past seven days (-2.6%).

This marks five consecutive weeks of improvement and puts us 24% off the peak in late May – a decline of 1.17M plans since that point.

As of September 22, 3.6M homeowers remain in COVID-19-related forbearance plans, or 6.8% of all active mortgages, down from 7% last week. Together, they represent $751 billion in unpaid principal.

Servicers continue to proactively assess September-scheduled forbearance expirations for extensions and removals. As of the 22nd, 1.1M forbearance plans are still set to expire this month, down from 1.7M just last week.

With more than a million forbearance plans for which September’s mortgage payment was the last payment covered under forbearance plan, significant removal/extension activity is still likely over the next few weeks.

Some 4.8% of all GSE-backed loans and 11.1% of all FHA/VA loans are currently in forbearance plans. Another 7.1% of loans in private label securities or banks’ portfolios are also in forbearance.

The week’s decline was primarily driven by forbearance plans among portfolio-held mortgages, which saw a 51K (-8%) decline from last week. During that same period, GSE loans fell 20K (-2.3%) while FHA/VA loans were down 17K (1.2%).

Over the past month, active forbearance volumes are now down by 9%, with 357k fewer active COVID-19 forbearance plans than at the same time in August. Of the 3.6M loans still in active forbearance, some 78% have had their terms extended at some point since March.

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.