Forbearance numbers dropped at their fastest pace
Approximately 123,000 borrowers rolled off of forbearance plans in the seven-day period ending Nov. 9, a 10.8% decrease week-over-week. Exits picked up just one week after the number of distressed loans had fallen by 85,000, or 6.9%. The figures come from Black Knight’s McDash database.
“Nearly 300,000 borrowers have left their plans over the past two weeks, down from 455,000 over the same two-week period last month, as we hit the downslope of exit activity,” said Andy Walden, vice president of market research at Black Knight, in a blog post.
More than 4.7 million homeowners entered COVID-related forbearance plans in the early months of the coronavirus pandemic thanks to CARES Act provisions, which granted payment suspension for up to 18 months. Borrowers who entered forbearance in the first weeks of the pandemic saw their relief expire at the end of September, leading to a surge of exits expected to continue for the next several months.
Although the peak of those exits has likely passed, Walden said further reductions were still expected.
“More than 250,000 plans are still listed with October/November reviews for extension/removal. Half of those are expected to reach final expiration, which could lead to continued improvement, albeit at a slower pace, in the weeks ahead,” he said.
The past week’s drop-off brought the total number of distressed loans down to 1.01 million, a 1.9% share relative to the 53 million active mortgages currently serviced. The forborne share fell below 2% last week for the first time since early in the pandemic, Walden noted.
Forbearance drops among mortgages held in bank portfolios or private label securities — which received no CARES Act protections — accounted for the greatest number of exits at 59,000 or 15.9% of their overall total. Loans in forbearance backed by the Federal Housing Administration and the Department of Veterans Affairs also fell significantly by 48,000, down by 11.3% of volume, while government-sponsored enterprise distressed mortgages decreased by 16,000, or 4.8%.
Within portfolios or private label securities, forborne loans currently make up 2.4% of active loan count. The number of borrowers within the FHA- and VA-backed pool of forbearances is now down to 3.1%, while distressed loans in GSEs fell to 1.2% of their total being serviced.
Encouraging signals appeared among the diminishing number of
“Along with strong exit volumes, new plan entries were down 9% from the week prior,” Walden said. “In fact, it was one of the bottom five weeks in terms of new entries since the onset of the pandemic.”
The unpaid balance among remaining loans in forbearance fell correspondingly across all investor types, with the overall sum dropping 11.3% from $212 billion to $188 billion. The unpaid balance held in portfolio and private label securitized mortgages dipped from $71 billion to $56 billion, a 21.1% decrease. The FHA and VA distressed mortgage total reduced by a more modest 8.6% from $71 billion to $65 billion, while unpaid balances in the GSE pool of forborne loans decreased 4.3% from $70 billion to $67 billion.
