Forbearances Rise Again

New forbearance plans rose for the second week in a row, up by 19,000 plans (2.3%), according to Black Knight’s blog, Vision.

The increase was driven primarily by a 9.6%, 9,000, jump in FHA/VA plans. Forborne loans held by portfolios and PSL also rose by 9,000 (3.3%) while GSE plans rose by 1,300 (0.5%).

Black Knight noted that the increases follow a pattern of “significant plan exits followed by predictable lulls driven by new plan starts and restart activity”.

“This week’s data held true to that pattern,” the post reads.

This is the second consecutive week of increases after a long period of declines, though Black Knight stressed that last week’s percentages were artificially pushed up by restart activity paired with an exit “lull”.

But analysts predict 2022 will be another steady year for forbearances and foreclosures.

In a recent webinar, RealtyTrac EVP Rick Sharga and Mortgage Policy Advisors Managing Director and Five Star Global Chairman Ed Delgado predicted 2022 would look much like 2021, with low rates of new forbearance plans and serious delinquencies.

“The presumption at the start of the pandemic was that there was going to be this gradual swelling of foreclosures, as forbearances expired and consumers had nowhere to go,” said Delgado. This narrative never played out.

“I look to the low number of new delinquencies, as being very positive,” Sharga added. “It speaks to the quality of loans entering and exiting the system.”

Plan volumes remain below last month’s numbers, down 57,000 (-6%). An additional 100,000 plans are up for extension or removal in the final week of January, with over a third expected to expire.

The total number of mortgage holders in Covid-19 related forbearance is now 835,000, or 1.6% of all mortgages.

Here are some more highlights from the post:

  • Share of FHA/VA loans in forbearance: 2.4% (+0.1%)
  • Share of GSE loans: 1% (unchanged)
  • Share of Portfolio-held and PSL: 2.1% (+0.1%)