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Forbearance Activity Dips as Market Prepares for 700K Expirations

Forbearance activity is declining again, according to the latest data from Black Knight, which has been tracking COVID-related forbearance volumes since near the onset of the pandemic. The dip, significant at 71,000 or negative 3.2%, comes on the heels of two consecutive weeks of slightly increasing numbers.

As of Tuesday, June 1, 2.12 million or 4% of mortgage loans remain in COVID-19 associated forbearance plans. By type of loan, 2.4% of Fannie Mae of Freddie Mac-backed loans are in forbearance, as are 7.1% of Federal Housing Administration/ U.S. Department of Veterans Affairs loans, and 4.7% of portfolio/private label securities loans.

For all loan classifications, the numbers dropped. Fannie and Freddie loans dipped by 26,000 or negative 3.8% from Tuesday to Tuesday. FHA and VA forbearances dropped by 28,000 or negative 3.2%. And even private and portfolio plans, which had been climbing the most in the past two weeks, fell by 17,000 or negative 2.7% in the past seven days.

Both forbearance plan starts and restarts experienced noticeable declines, according to Black Knight's McDash Flash daily performance data for the week. Overall, plan starts saw their lowest weekly levels since the beginning of Black Knight's pandemic-related forbearance tracking. That is compounded by the fact that plan exits hit their highest level in four weeks. That was driven by the expiration of many plans at the end of last month.

Black Knight reported that at the end of its data-collection week, some 65,000 plans remained with May expiration dates, so, the analysts report, "there's still a bit of opportunity for improvement there next week as well.

This is a milestone month for tracking forbearance numbers as 700,000 plans are scheduled to expire at the end of June, which marks the final quarterly review for early forbearance entrants before they reach their 18-month expirations later this year.

Authors at the Black Knight blog say they will be "keeping a close eye on exit activity in coming weeks, particularly in the first week of July."

DS News in collaboration with Xome will host a webinar on Tuesday, June 8 entitled  "Servicing in a Post-Pandemic Era: Ensure You’re Prepared to Help Customers" at 1:00 p.m. CDT.

As mortgage servicers prepare for the surge in homeowners who’ll be coming out of forbearance plans, our panelists will discuss servicer preparedness and the best ways to help homeowners transition out of forbearance. The "Servicing in a Post-Pandemic Era: Ensure You’re Prepared to Help Customers" webinar is complimentary with registration.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others. Contact Christina at christina.hughesbabb@thefivestar.com.
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