Growth rate for forbearance requests continues slowing: Black Knight

The pace of growth in the number of American homeowners requesting forbearances slowed significantly in the past week, according to Black Knight. If that holds, a 0.6 percentage point increase in the total number of forbearances is probable over the next two months.

But if the rate of growth picks up again, the firm projects a 3 percentage point increase over the same period.

The average net increase last week was under 26,000 per day. There are 4.66 million mortgage loans in forbearance as of May 12, up from a revised total of 4.5 million the previous week. The current total represents 8.8% of all mortgage loans outstanding.

In its optimistic projection, based on the current one-week average and estimating a 10% daily decline in requests, there could be 4.9 million mortgages in forbearance at the end of May (9.2% of active mortgages) and just under 5 million one month later (9.4%), Black Knight said.

But if things turn for the worse, using the latest two-week average moving forward and projecting that a 10% daily decline in requests does not happen until June 15, Black Knight estimates that as many as 5.4 million loans (10.1%) could be in forbearance at the end of May, and nearly 6.3 million (11.8%) by the following one.

By unpaid principal balance, the total dollar volume in forbearance as of May 12 is approximately $1.03 trillion.

The government-backed mortgage programs, Federal Housing Administration and Veterans Affairs, have by far the highest percentage of their loans in forbearance at 12.4%. That represents slightly under 1.5 million loans with a UPB of $256 billion.

Loans not covered by the government relief act — such as those held in portfolio or in private-label securitizations — had both the second largest share at 9.2% and second largest UPB at $355 billion.

While there were 1.96 million conforming mortgages in forbearance with a $414 billion UPB, it was just 7% of the outstanding total of these loans.

In April, the Federal Housing Finance Agency capped servicer advances of principal and interest payments to four months. Using the current number of loans in forbearance, Fannie Mae and Freddie Mac servicers face $8.8 billion in P&I advances over that period (an estimated $2.2 billion per month).

Across all investor types, servicers have a total of $5.7 billion per month due on P&I advances, including $2.1 billion for private-label mortgage-backed securities and $1.4 billion for FHA/VA loans.

And servicers are responsible for another $2.1 billion of tax and insurance payment advances per month. It includes approximately $900 million for Fannie Mae and Freddie Mac loans, $600 million for government loans and $700 million for private-label and portfolio loans.