About 4.7 million mortgages are in forbearance, representing 8.8% of all home loans, Black Knight said in a Friday report.
The number of borrowers who secured an agreement to delay their payments was up from 4.5 million last week, the mortgage data firm said. The pace of new forbearances slowed to about 27,000 a day, down 85% from April, Black Knight said.
Americans are seeking help with their mortgages in the midst of the biggest labor-market shock since the Great Depression in the 1930s. In the two months since the COVID-19 pandemic hit the U.S., 36.5 million Americans have lost their jobs as states enforced stay-at-home orders to try to stem the spread of the deadly disease.
The loans currently in forbearance total $1 trillion in unpaid principal, Black Knight said. Broken out by investor type, loans backed by Fannie Mae and Freddie Mac account for 7% of mortgages in forbearance, while loans backed the Federal Housing Administration and the Veterans Administration account for 12.4%, the report said.
By the end of June, almost one in 10 mortgages – and possibly one in eight, depending on the condition of the economy – could be in forbearance, Black Knight said in the report.
“Based on the one-week average and assuming an optimistic 10% daily decline moving forward, we would see 4.9 million loans in forbearance by the end of May,” representing 9.2% of active mortgages, the report said. By the end of June the volume could reach 5 million, or 9.4% of mortgages, it said.
In a more pessimistic scenario, based on the daily rate increasing at a faster pace, there could be 5.4 million loans, representing 10% of all U.S. mortgages, in forbearance by the end of May and almost 6.3 million mortgages, or 11.8%, by the end of June, Black Knight said.