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Mortgage

Forbearances rise for third consecutive week

Forbearance plan removals fell to their lowest level since the start of the pandemic

The number of mortgages in active forbearance rose by 15,000 in the last week of 2020, according to a report on Friday from Black Knight. Though the raw number increased for the third consecutive week, the percentage of mortgages in active forbearance remained at 5.3%, unchanged from the two prior weeks.

Last week’s uptick was largely driven by the share of Federal Housing Administration and Veterans Administration‘s loans in forbearance, which rose from 9.5% to 9.6%.

Loans in forbearance as a share of private label securities or banks’ portfolios also rose 10 basis points to 5.4%.

While the share of Fannie Mae and Freddie Mac loans seemed to teeter back and forth in weeks prior, the GSE’s forbearance portfolio share remained unchanged at 3.5%.

Overall, Black Knight estimates 2.83 million homeowners are in some form of forbearance heading into the new year, and due to the holiday weekend, forbearance plan removals fell to their lowest level since the start of the pandemic.


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According to the report, 270,000 plans were set to expire at the end of December, and another 367,000 by the end of January.

The FHFA has not currently set an end date for its temporary COVID-19 forbearance policy, though it does plan to monitor the path of the virus and respond accordingly. Forbearance requests for multifamily property owners, on the other hand, are available through March 31.

The FHA announced on Dec. 21 that it was extending it’s deadline for single-family borrowers to request initial forbearance through Feb. 28. If those borrowers choose to take the full year’s worth of forbearance, some FHA borrowers may not exit their plans until February 2022.

As of Dec. 21, the Mortgage Bankers Association estimates 29.8% of forbearance exits from June 1 through Dec. 13 were borrowers who continued to make their monthly mortgage payments. However, 13.2% represented borrowers who did not, and exited without a loss mitigation plan in place.

While servicers attempt to navigate the millions of borrowers in forbearance, a second round of stimulus checks was also released on Dec. 21 with an eviction ban attached through January and $25 billion in emergency rental assistance to combat an eviction crisis.

Michael Sklarz, who leads Black Knight Data and Analytics’ Collateral Analytics team, predicts that rather than face foreclosure, many homeowners nearing the expiration of their forbearance plans under the CARES Act might put their properties up for sale. This could help alleviate the current supply shortage in the housing market.

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