The forbearance fee hovers on the 12 month low because the weekly decline decreases

October's indulgence is nearing a 12-month low since the rise in exits, but the number of loans in such plans has declined less sharply over the past week, according to the latest Black Knight report.

Around 432,000 homeowners ended their pandemic-related payment suspensions in the first 19 days of the month, and more than 280,000 plans have month-end review appointments, so only 2.3% of loans are tolerated, up from 2.4% the previous week.

However, last week the numbers were only down 0.6%, down from a 10% drop in the previous reporting period.

"After two weeks of significant reductions in the number of active moratoriums (as hundreds of thousands of homeowners were nearing their end of life), we saw a much more modest improvement," said Andy Walden, vice president of market research for Black Knight, in a blog post.

The recent decision by federal authorities to extend the deadline for initial deferral requests until the end of the national emergency did not increase the deferral on government loans, but portfolio and private label securities in plans increased by 6,000. By comparison, the Federal Housing Administration and Department of Veterans Affairs guaranteed loans deferral for insured loans decreased by 10,500. The number of loans bought by the government-sponsored Fannie Mae and Freddie Mac that were tolerated decreased by 2,800.

Meanwhile, a separate report from Black Knight shows that foreclosure beginnings have returned to the lower end of the range seen during the September pandemic after a jump the previous month. Its numbers contrast with previous ones reported by Attom Data Solutions, which show an increase in launches over the month.

Black Knight's numbers show a decrease to 3,900 launches in September from 7,100 in August. They also show that the default rate (including loans with deferred payments) has fallen below 4% for the first time since the coronavirus hit the US. The default rate for the month was 3.91%, compared to 4% in August and 6.66% a year earlier.

A market-wide rollout of borrower contacting rules and the need to process high volumes of forbearance exits were among the developments that could have reduced some foreclosure-related numbers over the past month. The rules applied earlier to some loans due to a bridging measure, but didn't officially go into effect for the entire market until August 31.

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