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.

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