Forgiving mortgages have fallen the toughest in 6 months

According to a report released Friday by Black Knight, the number of mortgages whose payments have been suspended due to difficulties has fallen more than any week since October.

In the week ending April 6, there were more than 2.3 million forbearance loans. This represents a decrease of 9% from the previous week and an increase of more than 13% from over 2 million a year ago. Around this time in 2020, borrowers were requesting deferred payments.

The recent decline could be substantial if it reflects borrowers' optimism about the economic recovery with the introduction of vaccines. However, it may instead be a short-lived decline related to an earlier grace period that the Biden government recently extended on Fannie Mae, Freddie Mac, and other government loans.

However, in his weekly report, Black Knight said, "The decline is largely due to early indulgent beginners abandoning their plans after 12 months (and what their final expiration would have been before the renewals)."

In the past week there were 280,000 exits and 158,000 entries and restarts.

Overall, indulgence rates ranged from 4% to 5%, and according to separate reports from Black Knight (4.4%) and the Mortgage Bankers Association (4.9%), all groups of investors were down.

More than 21% of all borrowers currently in forbearance have extensions that have exceeded 12 months, the MBA found in a report released Monday.

The percentage of borrowers who stepped out of indulgence in the past month and requested loan terms changes due to a drop in income is also above 21%, according to MBA statistics.

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