The number of lenient borrowers is at its lowest level in 10 months, but with compliant borrowers now able to extend their plans, it is uncertain whether that amount will continue to decline in the near future, Black Knight said.
As of February 9, there were 2.67 million borrowers, or 5% of the 53 million outstanding mortgages in an indulgence plan, the least since mid-April. These loans have an unpaid principal of $ 532 billion.
A week earlier there were 2.71 million borrowers, or 5.1% of the outstanding mortgages with a UPB of $ 541 billion in a forbearance plan.
The declines over the past two weeks were due to plans that expired on Jan. 31, Black Knight said.
The February 9 announcement by the Federal Housing Finance Agency that would allow borrowers to apply for an additional three months of Fannie Mae and Freddie Mac loan relief later this month is likely to turn the trend in forbearance outcomes on its head.
"There are significant unknowns remaining, including the impact of such extensions on overall recovery," wrote Andy Walden, director of market research at Black Knight, in a blog post. "We have already seen signs that forbearance is undermining borrowers' equity positions."
Since the beginning of December, the average month-to-month decline has been less than 2%.
Now, with the FHFA expansion, this could be slowed down even further as around 30% of the existing forbearances for Fannie and Freddie borrowers should expire at the end of March.
If Ginnie Mae followed suit and extended the deadline for the Federal Housing Administration and Veterans Affairs mortgages in their securities to 15 months, at the current rate of improvement at the end of June, around 2.5 million homeowners would be lenient when the first round hit their new 15-month expiration times, Walden said.
There are now 907,000 government-sponsored corporate loans in a forbearance plan with a UPB of $ 189 billion. That was less than 913,000 mortgages with a UPB of $ 190 billion a week ago.
The largest number of forbearance mortgages are the government guaranteed products with 1.11 million loans in one plan. Since loan amounts are typically lower than conforming loans, the UPB is only slightly higher at $ 190 billion. Last week there were 1.26 million FHA and VA loans in a plan with a UPB of $ 192 billion.
With respect to portfolio and private label forbearance mortgages that are the servicer and investor's responsibility to grant, 650,000 loans are currently included in a plan with a UPB of $ 153 million. This category saw the largest decrease from week to week as 680,000 of these mortgages were included in a plan with a UPB of $ 159 billion for the period ended February 2.