After two consecutive monthly increases, forbearance volumes last week declined, according to Black Knight’s McDash Flash Forbearance Tracker [1]. Black Knight author Andy Walden [2] notes that the dip was an expected result of January's plan expirations. More precisely, the total number of loans in active forbearance this past week dropped by 45,000 or 1.6%.
As of last Tuesday, an additional 47,000 plans were set to expire on January 31.
"As servicers review those plans for extension or removal, we could see some further, modest declines over the next few days," notes Walden.
By Loan Type
All types of loans saw declines. The largest decreases were seen in FHA/VA loans at -23,000/-2%, followed by 12,000 or a -1.3% drop among GSE-backed loans, and a 10,000 or -1.4% reduction in private loan forbearances.
While last week's numbers seem encouraging, the experts say that improvement largely continues to be limited.
In analyzing the numbers it is important to remember that as of Tuesday, February 2, some 2.72 homeowners — 5.1% of borrowers — remain in active forbearance plans, reportedly as a result of the COVID-19 crisis. And the total numbers since last month have lessened by only -1.5% or 42,000.
Over Time
"Volumes have been essentially stuck in the 2.72M – 2.81M range since early November," Black Knight reports. "As we move toward the middle of February, keep in mind the trend of mid-and late month increases in active forbearance plans."
Looking ahead
With 390,000 plans set to expire at the end of February, this represents what might be the final opportunity for moderate improvement in forbearance volumes before the first wave of plans reaches the scheduled 12-month expirations at the end of March, according to Black Knight.