A ban that stopped distressed borrowers from losing homes has just ended, but the processing of at-risk loans won’t loom large until September when 18,000 people per business day exit forbearance, according to Black Knight.
To be sure, government-related agencies
“The numbers exiting this fall are actually bigger than we had thought,” Andy Walden, vice president of market research at Black Knight, said in an interview about the company’s latest monthly Mortgage Monitor report for June. Projections in the study are based on a deeper analysis of June data than in its earlier
Not only is the number large, a lot of the tiered expiration dates concentrate the processing of government-insured or guaranteed loans. These tend to have characteristics indicative of
Because of forbearance,
Roughly 1 million people will still be seriously delinquent when forbearance expirations kick into high gear this fall. While the overall delinquency rate is in line with historic averages, the number of loans late by 90 days or more is four times what was seen pre-pandemic.
How many seriously delinquent borrowers recover could depend on the Treasury’s $9 billion
The dollar amount of missed payments compared to pre-pandemic has roughly doubled, rising to $64 billion from closer to $32 billion. States have discretion related to how the money can be used to homeowners’ benefit, so it’s unlikely they will solely to remedy missed payments.
As with
Differences by state exist because the money has been allocated based on delinquency and unemployment numbers, but the dollar amount of payments missed are higher in certain states like New York and Hawaii, Walden noted. In addition, when the money will reach low- and moderate-income homeowners and who it will reach is in question. States are just starting to turn in their plans for distribution.
Newly allowed foreclosures, or deals struck in which borrowers who can’t resume normal or modified payments allow their homes to be sold to satisfy their debt, could eventually add to inventory in a tight housing market. Foreclosures could add half a month of inventory if spread out over the course of a year, according to
If the 4,000 to 5,000 foreclosures per month processed during the ban return to their pre-pandemic level, they could eventually run at a much higher rate.
Returning to normal will take time, particularly in states where foreclosures require a court process and because consumer protections like forbearance are in place, but eventually it could add to inventory, said Walden.
“In my opinion, it’s not likely to fully make up for the deficit that we have, but it could be a move in the [that] direction,” he said.