In the past week, our McDash Flash Forbearance Tracker found that forbearance volumes in the U.S. edged lower (-12,000), including an improvement of 13,000 among portfolio/PLS loans in forbearance and 2,000 among GSE loans. These improvements were partially offset by a rise of 3,000 among FHA/VA forbearance plans.
As of Dec. 8, 5.2% (2.75 million) of all mortgages were in active forbearance, including 3.5% of GSE loans, 9.3% of FHA/VA loans, and 5.1% of PLS/portfolio loans.
Despite the marginal weekly improvement, forbearance volumes are now up 21,000 month-over-month, marking the first monthly increase since the onset of the recovery in late May/early June. This increase is due in part to limited forbearance expiration activity in November, which has resulted in reduced forbearance removal activity in early December compared to previous months.
More noticeably – and potentially concerning – is the fact that forbearance plan starts have begun to trend upward. There were more than 40,000 first-time starts over the past week, representing homeowners who had not yet been in a COVID-19 forbearance plan, the highest such number of first-time starts since the beginning of September.
The increase suggests that rising COVID-19 case rates and measures undertaken to try to control the spread may be contributing to an increased need for forbearance assistance. New starts are now up 19% over the past two weeks, while overall starts (including restarts) are up 5% over the same period.
Black Knight will keep a close eye on this trend, which – should it continue – could alter expectations about the length of recovery.