Mortgage Forbearances Fall for the First Time
The number of mortgages in forbearance declined this week for the first time since the start of the COVID-19 pandemic, Black Knight said in a report on Friday.
The number dropped to 4.73 million from 4.76 million in the prior week, the mortgage data firm said. Measured as a share of all mortgages, forbearances dropped to 8.9% from 9% in the prior week, according to the Black Knight data.
It was the first weekly decline since the CARES Act was enacted at the end of March. The CARES Act mandated that Americans with government-backed loans who were economically impacted by COVID-19 be provided with the option to suspend mortgage payments for up to 12 months.
“After rising sharply in April and then leveling off toward the end of May, the number of American homeowners in forbearance plans has now decreased for the first time since the crisis began,” said Black Knight CEO Anthony Jabbour.
About 7.1% of mortgages backed by Fannie Mae and Freddie Mac are now in forbearance, the report said. That’s 2 million mortgages with an unpaid principal balance of $420 billion.
About 12% of home loans back by the Federal Housing Administration and the Veterans Administration have suspended payments, Black Knight said. That’s 1.5 million home loans with an unpaid principal balance of $255 billion, the report said.
In addition, there are 1.3 million private-market mortgages in forbearance, representing a 9.6% share, Black Knight said. Private-market mortgages aren’t backed by a government agency or a GSE. They could be jumbo mortgages held by banks or home loans packaged into private-label bonds. The unpaid principal balance for those mortgages is $369 billion.
This week’s decline in the total volume of mortgages in forbearance will shift the attention of servicers.
“The decline is driving a shift in servicer focus from forbearance pipeline growth to forbearance pipeline management,” Black Knight said.