After nearly 40 million people became unemployed by May because of COVID-19, the housing industry, borrowers and the Federal Reserve quickly realized that without ample aid, things could quickly turn sour. However, servicers leveraged the lessons learned from the last recession to help avoid a catastrophe, synergistic technology and a blanket of forbearance large enough to cover the nation kept mortgage servicers busy, but prepared.
By mid-May, 4.7 million mortgages were in some sort of forbearance strategy, representing 8.8% of outstanding home loans.
For many mortgage servicers, those numbers are already falling. By mid-October, Black Knight estimated 36% (around 2.3 million) of those who entered forbearance have since exited and continued to perform.
But to really grasp what servicing will look like in 2021, Marina Walsh, Mortgage Bankers Association vice president of industry analysis, said not to focus on the population that continued to pay while in forbearance, but on the borrowers in serious delinquency.