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Forbearance Activity Sustains Momentum

house, home, housing, residentialActive forbearances continue rising to new heights as again this week, the number of mortgages in active forbearance jumped--rising by 20K from last Tuesday, according to Black Knight. 

 This momentum sustains the trend of mid-and late month spikes in active forbearance plansThat’s burgeoned into a recurring trend since the kickoff of the recovery. 

A descent of 4,000 weekly in active GSE forbearance plans was offset — and more — in wake of a 9,000 uptick in FHA/VA forbearance plans in conjunction with a jump of 15,000 among portfolio held and privately securitized loans. As it has, the rate of improvement among GSE loans significantly outpace other investor classes. There’s been a 4% month over month dip in GSE forbearances; that’s about 4 times the rate of decline among FHA/VA (-1%) and portfolio held and privately securitized forbearances (-1.3%). 

As exits from plans to remain muted, the monthly descent in forbearance plans were steady this week at -2.1%. Meantime, this week, only 41k homeowners bolted from their plans. In terms of removals  

Around 172,000 plans remain set to expire at the end of the month — perhaps a modest opportunity for upticks in volumnext week. 

A total of 2.76 million — or 5.2% — of homeowners remain in forbearance as of Jan. 26, representing $551 billion in unpaid principal. That also includes 3.3% of GSE loans, 9.5% of FHA/VA loans, and 5.3% of portfolio held/privately securitized loans. 

Meanwhile, approximately half of homeowners in forbearance made their monthly mortgage payments during the dawn of the pandemic, in recent weeks, that’s sagged to 12%. 

 The number of mortgages in active forbearance this week decreased by 9,000, a 0.3% decline.

Compared to the same time last month, the total number of active forbearance plans were down by 1.5%. Black Knight noted that as of January 12, 2.73 million mortgages, or 5.1% of the national total, were in forbearance, representing $545 billion in unpaid principal. 

Roughly 15% of homeowners in active forbearance remain current on their mortgage payments, while 83% of these plans were extended at some point since last March. In its data report, Black Knight warned that the current statistics “further sets the stage for a great many plans to still be active when the first wave of forbearance plans begin to expire at the end of March.” 

Furthermore, Black Knight determined that forbearance starts were up by 10,000 from the week prior but remained 22,000 below the weekly average entering the holidays. Approximately 370,00 active plans are slated to be reviewed for either extension or removal by the end of January.  

About Author: Chuck Green

Chuck Green has contributed to the Wall Street Journal, Washington Post, Los Angeles Times, San Francisco Chronicle, Chicago Tribune and others covering various industries, including real estate, business and banking, technology, and sports.

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