The number of mortgages in active forbearance fell for the second consecutive week, according to the latest data from the McDash Flash Forbearance Tracker from Black Knight [1]. Overall, the number of active forbearance plans is down 77,000 from last week and 112,000 from the peak the week of May 22.
As of June 9, 4.66 million homeowners remain in forbearance plans, representing 8.8% of all active mortgages, down from 8.9% last week. Together, they account for just over $1 trillion in unpaid principal ($1,028 billion).
Around 7% of all GSE-backed loans and 12.2% of all FHA/VA loans are currently in forbearance plans. GSE loans saw the greatest reduction, with forbearances falling by 47,000 week-over-week, but decreases were seen across all investor classes, as compared to last week, which saw a decline among government-backed mortgages partially offset by a rise in portfolio and PLS mortgages.
Though the number of homes in forbearance has dropped, the Federal Housing Finance Agency (FHFA) has announced that it is extending several loan origination flexibilities currently offered by Fannie Mae and Freddie Mac (the Enterprises) designed to help borrowers during the COVID-19 national emergency, including the authority to purchase mortgages in forbearance, until at least July 31.
Additionally, the Consumer Financial Protection Bureau (CFPB) and the Conference State Bank Supervisors issued joint guidance to mortgage servicers clarifying the forbearance provision of the Coronavirus Aid, Relief and Economic Security (CARES) Act.
Section 4022 of the CARES Act permits a borrower with a federally backed mortgage loan who is experiencing a financial hardship due to COVID–19 to request forbearance from his or her lender. Upon receiving the borrower's attestation regarding his or her financial hardship, lenders and servicers are required to grant forbearance for up to 180 days regardless of delinquency status. The joint guidance seeks to clarify observed or anticipated actions by mortgage servicers concerning this provision.
The statutory language allows for a forbearance period of "up to" 180 days. Servicers can grant forbearance for less than 180 days at a borrower's request or with a borrower's consent. If a borrower and servicer cannot agree on an appropriate forbearance term or servicer cannot reach the borrower due to the circumstances, servicers must default to the term requested by the borrower or 180 days.