Forbearance Plan Activity Edges Higher

Andy Walden

Since the economic recovery began following the COVID-19 pandemic shutdown, monthly forbearance plan activity has stuck to a pattern of significant plan exits followed by predictable lulls driven by new plan starts and restart activity. This week’s data held true to that pattern.

According to our McDash Flash daily mortgage performance dataset, the number of active forbearance plans increased 19,000 (2.3%) since last Tuesday. The week’s rise was driven by a rise in new plan start activity. The four-week average for new start activity is now at its highest level since October. This is a trend worth watching.

FHA/VA plans and plans for loans held in bank portfolios and private-label securities (PLS) each increased by 9,000 (9.6% and 3.3% respectively). GSE loan plans increased by 1,300 (0.5%).

As of January 25, 835,000 homeowners remain in COVID-19-related forbearance plans, representing 1.6% of all active mortgages. The group includes 1% of GSE, 2.4% of FHA/VA and 2.1% of portfolio held and privately securitized loans.

Overall, plan volumes are down 57,000 (-6%) from the same time last month as borrowers continue to reach the end of their allotted forbearance terms. There is still some opportunity for additional improvement as we head into February, with more than 100,000 plans still marked for January month-end reviews for extension/removal. Just over a third of this group is expected to reach their final expirations at the end of the month.