The latest Black Knight Mortgage Monitor covers the Surge in Forbearance Volumes.
Key Points
- 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
Three 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.
Mish
No worries everyone. Money printer goes brrrrrr.
I am sure the $1200 lifeline the government provided gave a lot of people a temporary reprieve, but my expectations are by the end of summer, we will see a lot of pain in the real estate markets…..
The housing market faces its next crisis as May rent and mortgages come due
Millions of homeowners and renters already are behind on payments in the economic collapse, and the jobless ranks are growing. https://www.washingtonpost.com/business/2020/05/03/may-rent-mortgages-coronavirus/
This is also the case with SBA loans. If you took a loan expecting to be shut down for a month, squandered it on employees that aren’t working, only to find out you won’t open until September, you might find yourself in much worse shape than if you had just shut the doors.
These are Federally guaranteed loans, so the banks could give a $#!T about who they lend to. They are an obvious trap.
And Rent forbearance??
Forbearance does not equal forgiveness.
I’ve read quite a few stories on rent / mortgage forbearance … common theme … what should’ve been paid will tacked on somewhere sometime.
This “recovery” is completely unpredictable.
I would venture to say this is one of the most unpredictable times in the last 50 years.
War, virus, Fed/Gov, currencies, and of course the election make for an extremely unpredictable time period.
At this point I think any guess is as good as the next.