Mortgage

Forbearances lower additional and quicker in the direction of the center of the month

According to the latest data from Black Knight, forbearance exits have increased since the previous week and remained at the pace set earlier this year, with levels falling on all major loan types.

Forbearances fell 19,000 for the weekly period through October 26, after falling 7,300 a week earlier. The mid-month declines are typically less than the start and end of the month data when the plans hit their scheduled review dates. The current number of borrowers in Forbearance is currently around 1.22 million, 1.5% below the previous week's 1.24 million. The data comes from Black Knight's daily McDash Flash data set.

"More than 470,000 homeowners left the indulgence in the first 26 days of October, making this the biggest month for exit activity in more than a year," said Andy Walden, vice president of market research for Black Knight, in a blog post.

About 140,000 distressed borrowers are nearing the end of the pandemic deferral relief granted by the CARES law, which is likely to result in further cuts in the coming weeks, he added. Homeowners who opted for the CARES law protection at the start of the COVID-19 pandemic in March 2020 saw them under the terms of the bill at the end of September.

According to the Mortgage Bankers Association's survey of servicers, 22.4% of those who left deferral plans between October 4 and October 17 did so without a loss mitigation plan.

Forborne loans currently account for 2.3% of active mortgages, based on the total servicing portfolio of 53 million. This includes 1.3% of government funded corporate pools, 3.9% of the volume secured by either the Federal Housing Administration or Veterans Affairs, and 3% of portfolio or privately securitized loans.

Forbearances declined across all loan types, with GSEs-backed loans falling 7,900 after falling 2,800 the previous week. FHA and VA sponsored loans declined almost as much in volume, with 7,700 borrowers dropping out, slowing from the previous week's larger drop of 10,500. The portfolio and PLS forbearance pool also fell 3,300, reversing a week after adding 6,000 new distressed borrowers.

With the decline in bad borrowers, unpaid deferred mortgage balances fell 1.3% week-to-week, from about $ 231 billion to $ 228 billion. The current total is $ 74 billion in GSE pools, up from $ 76 billion a week earlier. FHA / VA-backed loans are $ 79 billion, down from $ 80 billion seven days ago. $ 75 billion is held in distressed portfolios or private label securities, just like the week before.

Earlier this month, the Consumer Financial Protection Bureau extended the deadline for homeowners to begin filing cease and desist requests for government-sponsored loans, including those raised through FHA and VA programs, due to pandemic hardship. Originally planned for the end of September, the application deadline was extended until the end of the pandemic.

So far, however, the extension has not sparked a wave of new indulgence that noticeably slowed the pace of the decline. Although the new starts were a bit higher in the week, the number is 28% below the level from the same point in time last month, Walden said.

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