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Forbearance Volume Milestone: Plans Dip Below 1.6M

The number of borrowers in COVID-19-related mortgage loan forbearance plans dipped below 1.6 million for the first time since the onset of the pandemic, according to the weekly report from Black Knight, whose data-analytics team has been tracking forbearance activity throughout.

Overall, active forbearance plans dipped by 22,000, that's -1.4%, Tuesday-Tuesday, bringing the number of homeowners utilizing the protective tool to just under the 1.6 million mark. That comes to about 3% of all mortgages.

Still, there was a rise of 8,000 new plans among private label securities and portfolio loans, but Fannie Mae and Freddie Mac-backed plans dropped by 15,000, as did Federal Housing Administration and Veterans Administration-backed mortgages.

Overall, forbearances dropped by 156,000 or -8.9% from the same time last month. The share of mortgage loans in forbearance plans is broken down as follows: 1.7% of GSE-backed loans are in forbearance, 5.2% of FHA/VA mortgages are on hold, and 3.8% of portfolio-held and PLS remain in these programs.

As for borrowers entering or restarting forbearance, both of those numbers rose for the week—that's been happening since mid-August, reports Black Knight.

"The rise in new plan starts is almost solely limited to FHA/VA loans, coinciding with the deadline for entry into forbearance for such loans expiring at the end of September," noted Black Knight's authors. "That said, unemployment benefits lapsed over the Labor Day weekend and COVID caseloads continue to rise, so it’s difficult to pinpoint the exact cause."

But, halfway through the month, they say they have seen 218,000 plan exits. And extensions are at their lowest since the onset of the pandemic, with only 45,000 plans extended this week.

With more than 462,000 plans scheduled for review for extension or removal in September, they predict exit volumes will likely rise sharply at the start of October.

Based on current allowable forbearance term lengths. they note that as many as 330,000 are set to reach their final plan expirations by the end of the month.

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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