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More Than 2 Million Borrowers Remain in Forbearance Plans

As coronavirus continues to decrease nationwide and the jobs market and economy gradually return to pre-pandemic levels, the share of mortgage loans in active forbearance continues to improve on a month-over-month basis, even as mid-months tend to show marginal week-over-week increases. This week is no different from several past, with the overall forbearance rate showing a minuscule mid-month increase, Tuesday to last Tuesday, of about 1,000.

Overall the number of forbearance plans is down 6% from the same period last month, reflecting an uptick in the monthly rate of improvement from last week’s 5.4%.

As of June 22, 2.06 million, or 3.9% of all mortgage holders remain in COVID-19 related forbearance plans.

Broken down by type of loan, 2.3% of loans backed by government-sponsored enterprises Fannie Mae and Freddie Mac remain in forbearance. Of Federal Housing Administration (FHA) and VA loans, 6.9% are still in forbearance. And 4.6% of portfolio and private-label securities loans are in forbearance plans.

The GSE's numbers were down for the week by 10,000. FHA/VA forbearance plans dropped by 7,000 for the week, while PLS and portfolio mortgage loans rose to the tune of 18,000 plans.

Starts were slightly down for the week and down an average 7% from the previous four-week period. Likewise, removals hit their lowest level in five weeks, and extension activity was down as well.

Black Knight's analysts remind us that more than 300,000 plans are scheduled for quarterly reviews between now and next Wednesday, which could lead to more exits. "We should all be expecting more activity one way or another as we near the 4th of July," they say. That builds on last week's comment that "what happens in early July will largely dictate the outlook for later this year."

As the servicing industry preps for more forbearance exits, DS News facilitated a webinar in which key players discussed their approaches and offerings for homeowners with forborne loans.

Panelists stressed that the No. 1 priority today is communicating with borrowers and keeping them in their houses. They cited possible options such as the Standalone Partial Claim, the Owner-Occupant Modification, the Combo Partial Claim and Loan Modification, and the FHA Home Affordable Modification Program.

"A big misconception for those not in the industry, and I deal with these customer calls on a weekly basis, they think in today’s environment, the servicer is out to foreclose and get their property back,” panelist Ramie Word, SVP of Default Servicing for Mr. Cooper said during the webinar.

"We know that’s not the environment we are in. The number one priority is to keep the customer in the home," Ramie continued. "Being able to partner with the GSEs and CFPB speaks volumes to the differences between the financial crunch of 10-12 years ago to where we are at now. We are able to have a dialogue and get answers to grey area questions, so we are all marching down the same path together."

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 [email protected].

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