Forbearance Exits Hit Mid-Month ‘Lull’

The number of loans in active forbearance fell 0.6% since last Tuesday, entering an expected, mid-month period of “lull,” according to Black Knight’s blog, Vision. Only 7,300 homeowners exited forbearance plans this week.

The slowdown is significant compared to the two weeks prior, during which forbearance rates were dropping at break-neck speed. Forbearance rates have been improving at the fastest pace since the pandemic began, with 432,000 homeowners exiting their plans in the first weeks of October alone.

But Black Knight noted that the dip is unremarkable, mimicking “the same mid-month lull in removal activity that we’ve been reporting on for many months now.”

Portfolio and PSLs plans rose by 6,000, lowering the average set by declines of 10,500 for FHA/VA loans and 2,800 for GSE loans.

Despite this, October figures remain strong thanks to early peaks. Forbearances fell 22.3% in the last 30 days, giving this month the largest number of exits since the same time the previous year. Plus, nearly 300,000 plans are still up for review in the coming weeks.

Foreclosures have spiked 34% in Q3, but the raw numbers remain low despite fears of a foreclosure tsunami as federal protections expire.

The total number of mortgage holders in Covid-19 related forbearance is now 1.24 million, or 2.3% of all mortgages.

Here are some more highlights from the post:

  • Share of Fannie and Freddie loans in forbearance: 1.3% (unchanged)
  • Share of VA and FHA loans in forbearance: 3.9% (-0.1%)
  • Share of GSE loans: 1.3% (unchanged)
  • Share of Portfolio-held and PSL: 3% (unchanged)