July 27, 2021

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Mortgage News

Forbearance Rate Improvement Expected to Continue

It’s Friday, which just means Black Knight published the results of its McDash Flash Forbearance Trackerand shows performance data for the past Tuesday through Tuesday.

Forbearance activity decreased again, albeit slightly, representing the eighth consecutive week of improvement. The low improvement numbers, which have decreased by around 1,000 since the previous week, are typical of the middle of the month, as the plans are renewed and the exits usually take place at the end or the beginning of the months.

The decline was more pronounced in Fannie and Freddie Assisted Loans (FHFA) at -6,000 and in Federal Housing Administration / Veterans Administration loans at 5,000. That was offset by a 9,000 forbearance activity on portfolio and privately securitized mortgages last week, Black Knight reported.

The analysts reported that the number of outstanding plans was down 298,000, or 11.4%, from the same period last year.

In total, 2.3 million, or 4.4% of all mortgage holders were in forbearance plans related to COVID-19 as of April 20 (FHFA 2.7%, FHA / VA 7.8%, and Portfolio 4.8%).

Both inflow and outflow have been muffled this week with less than 160,000 collective, extension and relocation muffles, according to the Black Knight research team. This is the lowest number in two months.

Around 280,000 expiry times are planned for Arpil. That said, we could see more improvements later in the month and well into May, according to the Black Knight crew.

“Then we have 435,000 May expiration times before jumping back to 890,000 in June,” wrote the Black Knight blogger. “This will be the last big month of review activity before the first wave of plans reach their final 18 month expiration.” Except for one other extension.

President Joe Biden announced last February an extension of the moratorium on home foreclosures, which was previously due to expire on March 31, to the end of June. This temporary moratorium blocks home foreclosures, allows late mortgage payments, and offers six months extra mortgage leniency to those who enroll by June 30th.

Starting activity continues to decline, according to Black Knight experts, and it is reasonable to expect another more moderate wave of removal activity in May, they add.