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Forbearance Plans See Largest Drop Since Start of Pandemic

Black Knight announced that active forbearance plans fell an additional 435,000 weekly—the largest drop since the onset of the pandemic.

As of July 7, 4.14 million homeowners were in forbearance plans, which represents 7.8% of all active mortgages—down from the prior week’s 8.6%. This represents around $900 billion in unpaid principal.

Black Knight stated that 6% of all GSE-backed loans and 11.6% of loans backed by the Federal Housing Administration and the VA are currently in forbearance plans. An additional 8.2% of loans in private-label securities (PLS) are also in forbearance.

GSE loans saw the largest declines in forbearances, falling by 200,000—an 11% drop. Portfolio and PLS also fell by 11%, which is 136,000 fewer active forbearance plans.

FHA and VA loans saw marginal improvements, dipping 6% for a reduction of 93,000.

"This latest decline in the number of homeowners in active forbearance is an encouraging sign of continued improvement,” said Andy Walden, economist and Director of Market Research for Black Knight. “The reduction of roughly 435,000—the largest single-week drop yet—was driven at least in part by the fact that more than half of all active forbearance plans entering the month were set to expire at the end of June. While the majority of those have been extended, this week's data suggests a significant share were not."

This report comes shortly after Black Knight reported that 4.1 million homeowners were past due on their mortgages, causing the national delinquency rate to rise to 7.76%.

Delinquencies jumped 20% and 1.3 percentage points higher in May, which Black Knight noted, “would have been the worst single month ever recorded if it weren’t for the 3.1 percentage point increase the month prior.”

The delinquency rate is up 4.5 percentage points from the 3.2% record low recorded back in January.

While servicers have a major task now in assessing loans in forbearance, Black Knight said, “this will also provide an early look at roll rates of loans in active forbearance,” and the insight from this summer “can be used for downstream modeling on performance and the residual volume of loans in active forbearance in coming months.”

The total number of loans that are either past due or in foreclosure is 4.3 million, up from 2.3 million at the end of March, according to Black Knight. However, the foreclosure rate is down by 5.8%.

About Author: Mike Albanese

Mike Albanese is a reporter for DS News and MReport. He is a University of Alabama graduate with a degree in journalism and a minor in communications. He has worked for publications—both print and online—covering numerous beats. A Connecticut native, Albanese currently resides in Lewisville.
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