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Mortgages in Forbearance Down From Peak 

Call it bust out time for mortgages in active forbearance. After staying the course for the last couple of weeks, they more than found their footing by improving more dramatically than anticipated, receding over the last week by 147k (-4%), according to Blackknightinc.com,  

In fact, since the May peak, active forbearances are now down about 1M (-21%), stated Black Knight’s McDash Flash Forbearance Tracker. While slowly and deliberately, overall, there was continued improvement in COVID-19-related levels of forbearance. 

A total of 3.8M mortgages remain in active COVID-19 related forbearance plans as of September 1. That’s 7.1% of all active mortgages, a drop off from 7.4%. They represent $804 billion in unpaid principal; of which 75% have had their terms extended.  

Portfolio-held loans, which descended by 75K this week, along with a drop of 49K in active forbearance plans, fueled the decrease. Meantime, there was a weekly fallback of -23K in FHA/VA loans.  

Active forbearance yielded ground over the last 30 days, dropping by 171K (-4%), with the heartiest uptick again among GSE loans (-128K, -8%). FHA/VA forbearances (-23K, -2%) and private/portfolio loans (-20K, -2%)experienced more moderate traction. 

This month, more than 2M COVID-19-related forbearance plans are on the brink of expiring, paving the way to a significant volume of extension/removal activity later in September and early October.  

Since the COVID-19 crisis swept the country, forbearances sagged, according to data from Black Knight. 

According to the McDash Flash Forbearance Tracker, as of June 2, 2020, 4.73 million homeowners, representing 8.9% of all mortgages are in COVID-19 mortgage forbearance plans. 

While there was actually a net decline of 43,000 forbearances among government-backed mortgages (Fannie, Freddie and FHA/VA) from May 26 to June 2, it was partially offset by an increase of 9,000 forbearances among mortgages in bank portfolios and private-label securities. 

“While this decline is welcome news, there are still concerning signs in the data," said Black Knight CEO Anthony Jabbour. "According to Black Knight’s McDash Flash Payment Tracker, far fewer homeowners in forbearance remitted May payments than did in April. If that trend holds true through the end of the month, the market should be prepared for another likely rise in the delinquency rate for May. Also, expanded unemployment benefits are scheduled to end on July 31. It remains to be seen how that will impact both forbearance requests and overall mortgage delinquencies.” 

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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