More than 3.8 million homeowners – or 7.3 percent of all mortgages – are now in forbearance as millions of Americans are out of work during the coronavirus pandemic, according to a new analysis released Friday by Black Knight.
Taken together, those mortgages make up $841 billion in unpaid principal, Black Knight estimates.
The analysis found that as of April 30:
- 1.7 million Fannie and Freddie loans (or 6.1 percent) were in forbearance.
- 1.26 million FHA and VA loans (or 10.5 percent) were in forbearance.
- 863,000 of all other loans (or 6.7 percent) were in forbearance.
The $2 trillion CARES Act includes a moratorium on foreclosures and the right to forbearance on federally backed mortgages. Forbearance allows borrowers to put off payments for at least six months if they suffer economic hardship during the pandemic.
Last month, the Federal Housing Finance Agency announced that mortgage lenders will only have to cover four months of missed payments from borrowers under forbearance during the coronavirus pandemic. The change applies to all mortgage lenders managing Freddie Mac or Fannie Mae backed loans.
FHFA, said that mortgage servicers with Fannie and Freddie loans will have “no further obligation to advance scheduled payments” to creditors after four loan payments have been missed. In short, the announcement means the loans in forbearance due to the coronavirus can be kept in mortgage-backed security pools as long as they are in forbearance.
Black Knight said that, at today’s level, mortgage servicers would need to advance $3 billion to holders of government-backed mortgage securities on COVID-19-related forbearances each month. Another $1.5 billion in lost funds will be faced each month by those with portfolio-held or privately securitized mortgages.
Given FHFA’s recently announced four-month limit on advance obligations, servicers of Fannie- and Freddie-backed mortgages could still face nearly $8 billion in advances based on the number of forbearance plans through April 30.