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Though Millions Remain in Forbearance, Numbers Are Decreasing

A week ago we saw forbearance activity drop below 2.6 million for the first time since last April, according to Black Knight's McDash Flash Forbearance Tracker, [1]and the decline continues this week.

Active plans fell again this week, dropping by another 19,000 (-0.7%) from the previous Tuesday. In total, this puts the number of active plans down by 135,000 over the last month, or – a 5% reduction.

The monthly decline represents the healthiest rate of improvement since the end of last November.

Black Knight's researchers say it is a direct result of servicers working through the 1.2 million plans that entered this month with scheduled March month-end expirations for extension and/or removal.

They stress that even with such strong monthly improvement, there are still more than 46,000 active plans with March month-end expirations, which provides the potential for additional improvement in the coming weeks.

As of March 23, 2.57 million homeowners remain in forbearance, representing 4.9% of all homeowners with mortgages.

By type of loan:

The week’s improvement was driven by decreases among both Fannie Mae/Freddie Mac-backed loans, at -21,000, and FHA/VA plans, which dropped by 10,000. Among portfolio/PLS mortgages, however, activity increased by 12,000.

"Early extension activity suggests servicers continue to approach forbearance plans in three-month increments, with the bulk of would-be March expirations being extended out through June," BK reported. "Plan extensions have accounted for 75% of all extension/removal activity in recent weeks, but removals are up simply as a result of the volume of expirations that were scheduled for this month."

The Federal Housing Finance Agency (FHFA) recently announced extensions of several measures that the agency says will align COVID-19 mortgage relief policies across the federal government. This announcement, which extends temporary measures (previously set to expire March 31) until the end of June follows the White House's February 16 moratoria extension [2] applied to all federally backed mortgages through the same period.

Said measures include provisions for borrowers with Fannie Mae or Freddie Mac-backed mortgages who may be eligible for an additional three-month extension of COVID-19 forbearance, according to a press release [3]. This additional three-month extension allows borrowers to be in forbearance for up to 18 months. Black Knight notes this includes the bulk of would-be March expirations.

Finally, the McDash Flash Payment Tracker shows that 90.7% of observed borrowers had made their payment through March 22, up from 89.8% at the same time in February.

Find the full weekly forbearance reports on Black Knight's blog [4].