Forbearances slow but May could see 'sharp increase' in delinquencies

The number of homeowners requesting forbearances was down again from a week ago, according toBlack Knight. Forbearance volume increased by about 93,000 from the past week compared to 325,000 during the first week of May and 1.4 million in the opening week of April.

Over 4.75 million mortgage loans sit in forbearance as of May 19, upfrom 4.66 million the previous week. The average net increase dropped to nearly 13,300 per day from under 26,000 per day week-over-week. The current total represents 9% of all mortgage loans outstanding.

"Of the 4.25 million homeowners who were in active forbearance as of the end of April, nearly half, 46%, still made their April mortgage payment," Black Knight CEO Anthony Jabbour said in a press release. "The fact that only 54% of borrowers in forbearance actually missed their payments helps explain the disparity between April's delinquency and forbearance rates. However, just 21% of borrowers in forbearance have made their May payments, which could lead to another sharp increase in the national delinquency rate for May if those payments are not received before the end of the month."

April had the largest single-month rise in delinquent mortgages, ballooning by 1.6 million, based on the data provider's First Look Report. As the growth rate in forbearance requests downshifts, it opens up the coming issue of modifying a vast stockpile of loans.

"While it appears — at least for the time being — that the surge of forbearance requests has begun to slow, for our servicing clients, it is the beginning of an entirely new challenge," Jabbour said. "Shifting to the management of such a large pipeline of homeowners in forbearance plans is paramount. Tools such as Black Knight's Loss Mitigation solution, integrated with our MSP servicing system, will be essential in managing not only the forbearance period, but the millions of loan workouts and modifications that are bound to follow."

As of May 19, the unpaid principal balance in forbearance totaled approximately $1.04 trillion.

The government-backed mortgage programs — Federal Housing Administration and Veterans Affairs — accounted for 12.6% of loans in forbearance, representative of 1.53 million loans and $256 billion in unpaid principal.

Loans held in private-label securitizations or portfolios and not covered by the government relief act compiled 1.24 million loans, a 9.5% forbearance share and UPB of $363 billion.

Forborne conforming mortgages held by GSEs totaled 1.96 million loans with a 7% share and $414 billion in UPB. On May 13, the Federal Housing Finance Agency extended the Fannie Mae and Freddie Mac payment deferral program to 12 months. Based on the current data, GSEs face an estimated $2.2 billion in principal and interest advances per month.

The estimated advances on active forbearance plans across all investor types total $5.8 billion per month, including $2.1 billion for private-label mortgage-backed securities and $1.4 billion for FHA and VA loans.

Tax and insurance payment advances total an additional $2.1 billion for servicers per month; including about $900 million for Fannie Mae and Freddie Mac loans, $700 million for private-label and portfolio loans and $600 million for government loans.