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Fourth Consecutive Week of Forbearance Improvement

Fourth Consecutive Week of Forbearance Improvement

Overall, the total number of mortgages in forbearance continued to improve this week, as the number of active plans declined another 26K (-0.7%). This marks the fourth consecutive week of improvement, and declining volumes for 10 of the past 12 weeks.

As of September 15, just under 3.7M homeowners remain in COVID-19-related forbearance plans. That’s down more than 22% from the peak of over 4.7M in late May.

These loans represent 7% of the active mortgage universe, unchanged from last week. Together, they represent $781 billion in unpaid principal.

Active forbearances are now down 266K (-7%) over the past 30 days, as servicers continue to proactively assess the 1.7M forbearance plans still set to expire in September for extensions and removals.

Given the large number of plans in which September’s mortgage payment was the last payment covered under forbearance plan, we could see significant removal/extension activity over the next few weeks.

Some 4.9% of all GSE-backed loans and 11.3% of all FHA/VA loans are currently in forbearance plans. Another 7.4% of loans in private label securities or banks’ portfolios are also in forbearance.

The week’s decline was primarily driven by GSE loans, with active forbearance plans dropping by 28K (-2%) and FHA/VA loans seeing just a -3K weekly decline. Active forbearances among loans held in private label securities or banks’ portfolios rose this week by 5K.

Forbearance plans among GSE loans have now fallen by 32% from their peak in late May, pushing the number of GSE loans in forbearance below FHA/VA volumes for the first time since COVID pandemic began. FHA/VA volumes have only fallen 11% since peaking in late May, roughly a third of the improvement seen among GSE forbearances.

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.