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What is Driving the Increase in Forbearance Activity?

The data analysts at Black Knight on Friday published weekly forbearance numbers [1]. Due to the Thanksgiving holiday, the data covered activity through Monday (November 23) as opposed to the usual one-week period.

According to a Black Knight representative, in summary, the number of mortgages in active forbearance saw another slight increase this week, increasing by 27,000 from the previous report.

"It’s important to remember that mild increases like this have been common in the middle of the month. Since the recovery started, the strongest declines have typically been seen early in the month, as expiring forbearance plans are removed," said Black Knight analyst Andy Walden.

The increase last week, according to Black Knight's  McDash Flash daily performance dataset, [2]included a 17,000 rise in FHA/VA forbearances and a 10,000 increase among loans in private label securities or banks’ portfolios. GSE forbearances remained flat week-over-week.

Despite the increase, the number of active forbearances remains down 7% (-207,000) from last month, roughly equivalent to the declines seen in August and September.

As of November 23, 2.78 million homeowners are in active forbearance plans, representing approximately 5.3% of all active mortgages, up from 5.2% from last week. Together, they represent $564 billion in unpaid principal.

Some 3.6% of all GSE-backed loans and 9.2% of all FHA/VA loans are currently in forbearance plans. Another 5.1% of loans in private-label securities or banks’ portfolios are also in forbearance.

Of the 2.78 million loans still in active forbearance, 81% have had their terms extended at some point since March.

Black Knight reports that "with COVID-19 cases spiking across the country, it will be important to keep an eye on the possibility of increasing unemployment numbers and forbearance starts over the coming weeks. Black Knight will continue to monitor the situation and report our findings [on its] blog."