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Black Knight reports forbearances rise following three weeks of declines.

Key Details

  • Overall, the number of active forbearance plans is up 79K from last week – erasing roughly half of the improvement seen since the peak of May 22 – with rises seen over each of the past five business days. 
  • As of June 23, 4.68 million homeowners are in forbearance plans, representing 8.8% of all active mortgages, up from 8.7% last week. Together, they represent just over $1 trillion in unpaid principal ($1,025B).
  • Some 6.9% of all GSE-backed loans and 12.5% of all FHA/VA loans are currently in forbearance plans. Another 9.6% of loans in private label securities or banks’ portfolios are also in forbearance.
  • Volumes were up across the board from the week prior with the largest increase among FHA/VA loans (+42K), with smaller increases seen in GSE (+25k) and non-agency (+12k) loans.
  • At today’s level, mortgage servicers may need to advance up to $3.5 billion/month to holders of government-backed mortgage securities on COVID-19-related forbearances. That’s on top of up to $1.4 billion in T&I payments they must make on behalf of borrowers.

No Progress 

Since the beginning of May, the number of active mortgage forbearance plans has ranged between 4.5 million and 5 million. 

The unpaid balance now tops $1 trillion. 

It will become harder and harder to pay that back. I suspect most will eventually roll past due amounts into a new loan. But first, people will have to make a number of on-time full monthly payments.

These loans are not reported to credit agencies as delinquencies, but it is not possible to refinance loans in forbearance until a number of current payments are made.

Disastrous Unemployment Claims

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Continued Unemployment Claims in 2020 June 25

The jobs picture is not making thing any easier. 

Initial claims rose by 1.48 million this week, but continued claims at 19.52 million tell the real story.

20 million people out of work for 8 straight weeks tells the real story.

For details, please see Impossible to Sugarcoat the Disastrous Unemployment Claims

IMF Assessment

Even the perennially late IMF is beginning to catch on.

It's a Crisis Like No Other: IMF Downgrades US GDP to -8.0%