According to Black Knight, after two months of gradual decline this week, there has been a significant drop in the number of mortgages in a forbearance plan.
As of September 1, there were 3.784 million borrowers on active plans, down 147,000 from 3.931 million the previous week. It's a 4.7% drop that Black Knight said was stronger than expected. The decline this week was 70% of the decline between July 7th and August 25th, when the number of forbearance plans fell by 213,000.
Now there are nearly 1 million fewer Americans in an indulgence plan since the high water mark of 4.761 million on May 26, Black Knight reported.
Currently, 7.1% of the outstanding mortgages with an unpaid principal of $ 804 billion are in forbearance. On May 26th, it was 9% of all mortgages with a UPB of $ 1.05 trillion.
The number of lenient government loans fell the least during this period. Currently, 11.5% of those loans are in a forbearance plan with a UPB of $ 238 billion. At the end of May it was 12.6% with a UPB of $ 262 billion.
About half of this week's decline, nearly 75,000 loans, was in the Portfolio and Private Label Securitization category. Borrowers on these loans are not subject to any protection provided by the CARES Act.
Over the past week, there were 47,000 forbearance less compliant mortgages, while forbearance for federal or guaranteed mortgage loans declined by 23,000.
Black Knight's latest estimates show that mortgage servicers require monthly advances of $ 4.6 billion in principal and interest payments, plus $ 1.7 billion in additional taxes and insurance. These are $ 1.6 billion and $ 600 million for Fannie Mae and Freddie Mac mortgages, $ 1.3 billion and $ 500 million for FHA and VA, and $ 1.7 billion and $ 500 million. USD for private label.
In August, approximately 500,000 borrowers left the COVID-19-related forbearance plans, while just over 500,000 extended their plans, Black Knight noted.
This week's decline isn't a reason to get complacent.
"September could be the real test, however, as affected borrowers were still receiving full unemployment benefits until July 31," company representatives wrote in an accompanying blog post. "More than 2 million COVID-19-related forbearance plans are now expiring in September and introducing a significant volume of extension / removal activities in late September / early October, reminiscent of late June and early July to a slightly lesser extent."