Volumes of forbearance plans have flattened, according to new data from Black Knight. As of May 26, 4.76 million homeowners are in forbearance plans, with a net increase of just 7,000 new forbearance plans since last week.
At these levels, mortgage servicers need to advance a combined $3.6 billion a month to holders of government-backed mortgage securities on COVID-19-related forbearances. That’s on top of the $1.5 billion in T&I payments they must make on behalf of borrowers.
P&I advance payments have been capped at four months for servicers of GSE-backed mortgages. Given today’s number of loans in forbearance, servicers of GSE-backed loans still face up to $8.8 billion in advances over that four-month period.
According to a survey from LendingTree, most homeowners who have been approved for a mortgage forbearance may not need one. Of the 25% of homeowners surveyed that applied, 80% were approved for a forbearance. However, while the majority of people who applied were approved, only 5% said they wouldn’t have been able to pay their mortgage without forbearance. Another 72% of those who received forbearance reported feeling at least a little guilty about it.
Those who applied for forbearance differed along with gender, generational, and income divides. In general, women were less likely to apply for forbearance than men, with 10.2% of women and 37.8% of men surveyed applying because of the coronavirus pandemic. While men were far more likely to apply than women, approval rates between the genders were similar, with 75% of women and 81% of men being approved.
Of all the generations, millennials and Gen Xers were more likely to say that they wanted a break from payments. Notably, 71% of respondents from these age groups said they could’ve made their payment but just wanted a pause. An average of only 4.3% of millennials and Gen Xers said they wouldn’t have been able to pay their mortgages without forbearance.
While fewer baby boomers applied for forbearance, as older homeowners are more likely to own their homes outright or are closer to paying off their mortgages, those who did were in much greater need. In fact, 20% of baby boomers said they needed forbearance to avoid missing their monthly payment.