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Forbearance Plan Expiration Looms for Many

A report from Black Knight reveals the most recent mortgage loan performance trends, related details, and what it could mean for future delinquency rates.

At the current rate of incremental improvement, for another 17 months, the national delinquency rate would remain elevated. On top of that, for serious delinquencies to bounce back to pre-pandemic levels, almost five more years would be needed. Meantime, the country remains on pace to still have almost 1.5-1.6 million excess seriously delinquent mortgages in the market as March hits the rearview mirror.

By the looks of things, March appears to be an inflection point for the mortgage market. At that point —assuming no additional action — 24% of all forbearance plans are set to hit their 12-month, and final, expirations.

Early on in the pandemic, half of homeowners utilizing forbearance continued to make monthly mortgage payments. That rate has descended steadily and now stands at 12%. A reasonable assumption: additional obstacles in returning to making payments still could be encountered by many borrowers still in forbearance for the full 12 months potentially could face a larger challenge in returning to making payments.

"For the roughly 6.7 million Americans who have been in COVID-19 related mortgage forbearance at some point since the onset of the pandemic, the programs have represented an essential lifeline,” said Black Knight Analytics President Ben Graboske. “The vast majority of plans have a 12-month cap on payment forbearance, though. And the various moratoriums which have kept foreclosure actions at bay over the past 10 months may be lulling us into a false sense of security about the scope of the post-forbearance problem we will need to confront come the end of March. Last year saw the largest number of homeowners – nearly 3.6 million – become 90 or more days past due since 2009, and as of the end of December, 2.1 million remained so."

Access the full report on Black Knight's blog, blackknightinc.com.

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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