Black Knight: Forbearances Improved First Week Of September

More than two million forbearance plans were set to expire this month, but Black Knight reports after the first week that number has dropped to 1.7 million.

The total number of mortgages in forbearance fell 66,000 this week, on top of a 150,000 drop last week. The change is the result of forbearances being assessed for extension or removal.

Taken together, that means the total number of homes in forbearance has dropped 6% in the last 30 days. And the number continues to trend down: 3.7 million homeowners are in Covid-19 related forbearance plans as of September 8, compared to 4.7 million in May, a 22% difference.

Most of the decline came from GSE loans, which fell 36,000 in the number of forbearance plans.  FHA/VA loans fell 18,00, and private label securities or banks’ portfolios fell 12,000.

Forbearance exits are being closely watched by industry analysts making predictions about the market this month. A Zillow report estimated that 25% of homeowners exiting forbearance could end up selling rather than restarting payments, which could shock the market with new inventory.

“Hundreds of thousands of U.S. homeowners are expected to exit forbearance in coming months. A significant share of these homeowners will likely end up listing their home for sale, contributing meaningfully to overall inventory levels and allowing homeowners in forbearance to benefit from home price appreciation and use the equity gained for a future down payment,” the report said.

Here are some more highlights from the post:

  • Forbearance plans represent $789 billion in unpaid principal.
  • Number of plans originating in the first week of September: 48,000 (-16% from the previous week)
  • GSE-backed loans in forbearance: 5%
  • FHVA/VA loans in forbearance: 11.3%
  • Private label securities/banks’ portfolios in forbearance: 7.4%
  • Number of borrowers who have had their forbearance plans extended: 75%