Forbearance has risen from a low reached earlier in March due to new activity and a processing lull in the private market, according to mortgage technology and data provider Black Knight.
Overall, pandemic-related payment suspensions rose 1% by a net 8,000 plans to 726,000 on a consecutive-week basis during the week ended March 15.
The weekly increase occurred despite the fact that entries and restarts fell to the lowest point since Thanksgiving. That was largely because of a mid-month processing lull that was particularly pronounced for the private market.
“The impact on portfolio/PLS volumes was due more to lack of outflow than inflow,” said Andy Walden, vice president, enterprise research and strategy, at Black Knight, in an email.
Despite this, the bank/PLS market’s forbearance rate of 1.8% remains lower than the FHA/VA market’s 2.2%, according to Black Knight’s McDash Flash dataset. However, the private market’s forbearance rate is higher than the Fannie/Freddie market’s, which is just 0.8%.
The net increase of 9,000 occurring in bank portfolio and private-label securities loans was offset partially by a 0.3% (1,000-plan) decrease in the market for mortgages insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs. Forbearance at government-sponsored enterprises Fannie Mae and Freddie Mac plateaued.
The private market lacks some of the standardization and programmatic relief available to government-related loans, which can slow the processing of forbearances. Reactivations and entries fell just 4% for loans in bank portfolios or private-label securities, compared with 11% overall, according to Walden. The exit rate in the portfolio/PLS sector dropped by 80% in the latest week, vs. a 68% decline for the mortgage market as a whole, he said.
The forbearance counts and unpaid principal balance of loans by sector were as follows as of March 15: FHA/VA, 265,000, $47 billion; bank/PLS, 240,000, $40 billion; and Fannie/Freddie, 220,000, $44 billion.
Although forbearances did rise on a net basis in the latest week, on a consecutive-month basis it was 5% lower. They will likely continue to fall when the market gets through its next processing cycle, according to Walden.
“Nearly 130,000 plans are still up for review by the end of March, with the third expected to reach their final expirations,” he said in his weekly blog post.