Over 1 million loans could exit forbearance by the end of June

The typical mid-month growth in forbearance plans marked only the second weekly rise in volume since late February, according to Black Knight.

Outstanding mortgages in forbearance grew by 16,000 to 2.179 million as of May 18 from 2.163 million one week prior. These delinquent borrowers represent 4.1% of the 53 million active mortgages in the market and combine for an unpaid principal balance of $428 billion, up from $426 billion week-over-week.

Despite the increased forbearance restart activity following two weeks of rapid declines, over 1 million forborne borrowers could roll off by the end of the second quarter.

“Nearly 190,000 plans are still listed with May 2021 expirations, providing a moderate opportunity for additional improvements over the next two weeks and more acutely in early June,” Andy Walden, Black Knight's director of market research, wrote in a blog post. “Another 830,000 plans are currently slated for review for extension or removal in June, the final quarterly review before early forbearance entrants begin to reach their 18-month plan expirations later this year.”

By loan type, only those backed by Fannie Mae and Freddie Mac decreased week-over-week, dipping by 1,000 to a total of 683,000. Government-backed mortgages — sponsored by the FHA and VA — rose by 4,000 to 885,000 overall. Portfolio and private-label securitized loans — which do not fall under CARES Act protections — increased by 13,000 to a total of 611,000.

Servicers need to make monthly advances of approximately $2.6 billion in principal and interest payments and $1 billion due in taxes and insurance per month, according to Black Knight’s analysis. Those breakdown to estimates of $800 million and $300 million for both government-sponsored enterprise and government-backed loans, and $1 billion and $300 million for private labels.