October 21, 2021

MP Now News

Mortgage News

Forbearance Volume Milestone: Plans Dip Below 1.6M

According to the weekly report from Black Knight, whose data analytics team is continuously tracking forbearance activity, the number of borrowers in COVID-19-related mortgage loan plans has fallen below 1.6 million for the first time since the pandemic began.

Overall, active forbearance plans fell by 22,000 from Tuesday to Tuesday, or -1.4%, bringing the number of homeowners using the protection tool to just under 1.6 million. That’s around 3% of all mortgages.

Still, there was an increase of 8,000 new plans in private label securities and portfolio loans, but the plans backed by Fannie Mae and Freddie Mac fell by 15,000, as were the mortgages backed by the Federal Housing Administration and the Veterans Administration.

Overall, the deferrals fell by 156,000 or -8.9% compared to the same point in time in the previous month. The proportion of mortgage loans in forbearance plans is broken down as follows: 1.7% of GSE-covered loans are in forbearance, 5.2% of FHA / VA mortgages are on hold and 3.8% of those held and PLS remain in these programs.

Borrowers entering or resuming forbearance have seen both numbers increase for the week – this has been the case since mid-August, reports Black Knight.

“The surge in new plan starts is almost entirely limited to FHA / VA loans, coinciding with the late September deadline for deferring such loans,” noted the Black Knight writers. “Nevertheless, the unemployment benefit expired on Labor Day weekend and the number of COVID cases continues to rise, so it is difficult to determine the exact cause.”

But halfway through the month they say they saw 218,000 plan exits. And renewals are at their lowest level since the pandemic began, with only 45,000 plans renewed this week.

With more than 462,000 plans to be considered for expansion or removal in September, they forecast the exit volume is expected to grow sharply in early October.

Based on current permissible deferral periods. They find that by the end of the month up to 330,000 will reach their final plan term.