September 28, 2021

MP Now News

Mortgage News

Is Rise in Forbearance Volume Cause for Concern?

This week, according to Black Knight’s weekly report, there has been a spike in overall COVID-related loan leniency plans, increasing by about 16,000, or 73%, Tuesday through Tuesday. This marks the second week of the surge after a sustained downtrend. Analysts say the fact that this is only the third week-to-week increase in the past 12 weeks signals that things are still steadily improving.

As of May 25, 2.2 million homeowners, 4.1% of all mortgages in the country, are on forbearance plans.

By loan type, 2.4% of borrowers with loans backed by Fannie Mae or Freddie Mac are on forbearance plans. 7.3% of those in the Federal Housing Administration or VA-backed loans; and 4.8% of portfolio or private label securities loans.

The weekly decrease in Fannie and Freddie loans of 1,000 was offset by an increase of 2,000 for FHA / VA and an increase of 15,000 for portfolio and privately securitized mortgages.

“After improvement accelerated as early forbearance entrants went through the 12-month review process in March and April, exit activity has since returned to ‘more normal’ levels, Black Knight reported.” Forbearance Plan Volume Increase Between Mid-Month and End of Month As we’ve seen over the past two weeks, the recovery so far has been very common. “

Plan launches were at their highest level in nine weeks, and most of those are reboots (homeowners who canceled their plans but needed assistance again), according to Black Knight.

By the end of May 2021, around 145,000 plans are still listed, which offer a moderate opportunity for further improvements in the next two weeks, and more precisely at the beginning of June. Another 780,000 plans are currently to be reviewed for extension or removal in June. This will be the final quarterly review before early indulgent beginners hit their 18-month plan expiration times later this year.

“June marks the 15-month check-out point for many of the early forbearance beginners, so we will be closely monitoring the exit rate during this time,” note the Black Knight researchers.

Forbearance numbers from the Mortgage Bankers Association Earlier this week, Black Knight’s data looked similar but showed a decline in general forbearance rather than an increase.