The latest Black Knight Mortgage Monitor covers the Surge in Forbearance Volumes.
- More than 3.8M mortgage holders – 7.3% of the total first lien market – have already entered into forbearance plans as of April 30.
- FHA/VA loans have the highest forbearance rates by investor class at 10.5% (1.27M), while the 1.7M (6.1%) GSE mortgages in forbearance represent the largest volume.
- Despite not being mandated by the CARES act, some 6.7% (863K) of portfolio held and/or private labeled security loans are also under forbearance » The $841B in UPB currently under forbearance is significantly impacting servicer cash flows.
- Roughly $1.1B/month in P&I advances are needed for FHA/VA loans in forbearance, plus another $480M in monthly taxes and insurance (T&I) payments hang in the balance as well
Surge Tapers Off
- After surging at the beginning of April and then rising again near the 15th – when late fees are typically charged on past due payments – the number of new forbearance requests has declined in recent weeks.
- While total forbearance volumes continue to mount, daily inflow has begun to taper off.
- Between 53,000 and 102,000 new plans have been put into place over each of the last nine days, less than a quarter of levels seen earlier in April.
Active Forbearance Plans Scenarios
- In an optimistic scenario in which daily forbearance volumes continue to decline by 10% per day, the number of forbearances could peak at approximately 4.5M in the coming months.
- Should current forbearance volumes hold steady through mid-June, more than 8M homeowners could enter into forbearance plans, representing 16% or more of all mortgages.
- If that adverse scenario holds true, servicers would be required to advance $4 billion in monthly principal and interest payments on GSE mortgages alone
Even under the FHFA’s recent four-month limit on principal and interest (P&I advances), servicers would still be bound to make $16 billion in advance payments over that time span
The middle scenario seems about right but the totals from now through mid-May will tell the story.