Fresh Start: Forbearance Plan Exits Surge in First Week of 2022

Andy Walden

January 7, 2022

Active forbearance plans welcomed in the new year with a healthy drop. Active forbearance plans welcomed in the new year with a healthy drop.

According to our McDash Flash daily forbearance tracking dataset, the number of active forbearance plans fell by 73,000 (-8%) this week. FHA/VA plans led an across-the-board decrease, falling 30,000 (-10%) from the prior week. GSE plan totals decreased 27,000 (-9%), while portfolio-held and privately securitized (PLS) plans fell 17,000 (-8%).

As of December 7, 882,000 mortgage holders (1.7%) remain in COVID-19 related forbearance plans, including 1.1% of GSE, 2.6% of FHA/VA and 2.1% of portfolio/PLS.

As of January 4, 824,000 mortgage holders (1.6%) remain in COVID-19 related forbearance plans, including 1.0% of GSE, 2.3% of FHA/VA and 2.1% of portfolio/PLS. Forbearance plan starts edged slightly higher this week; however, the 4-week moving average remains 8% below the same time last month.

Overall, the number of forbearance plans is down by 177,000 (-17%) from the same time last month, with the potential for modest additional improvements through the end of the year. Plan starts over the past four weeks are up 24% from the preceding four-week period, driven by a more than 40% increase among FHA/VA loans (with GSEs seeing a 29% increase). This is a trend we’ll be watching closely as we round out the year.

Overall, the number of active plans is down 123,000 (-13%) from the same time last month. Some modest opportunity remains for additional declines next week with 61,000 plans still listed as up for extension/removal in December 2021, more than 25,000 of which are expected to have reached their final expiration. An additional 186,000 plans are slated for extension/removal in January, although less than a third are expected to expire.