Little Change In Forbearances Mid-Month

The number of loans in forbearance stayed more or less the same as exits stalled mid-month, making up 1.9% of all active mortgages, according to Black Knight’s blog, Vision.

November has hit a lull in its third week that mimics similar slowdowns in the last few months. Black Knight has characterized these declines as “expected.”

The number of active forbearance plans rose 0.2% as activity hit its lowest level since mid-August. Plan volume rose by 5,000 for portfolio and PLS loans with small declines for FHA/VA (-2000) and GSEs (-1000).

FHA/VAs saw an increase in new plans, pushing start volume to its highest level since October.

Consumer Finance Protection Bureau (CFPB) head Rohit Chopra has zeroed in on foreclosures since his appointment. The CFPB recently released a joint statement with other government agencies announcing it will return to normal enforcement of borrower protections after a period of looser regulation during the pandemic.

“Failures by mortgage servicers and regulators worsened the impact of the economic crisis a decade ago,” he said.

“Regulators have learned their lesson, and we will be scrutinizing servicers to ensure they are doing all they can to help homeowners and follow the law.”

The increased enforcement is meant to protect families from foreclosure as a result of Covid-19. The Regulation X mortgage servicing rules were created after the Great Recession to prevent future foreclosure crises and give families the chance to find alternatives to foreclosure before losing their homes.

Under these rules, mortgage servicers must provide delinquent borrowers with continued servicer contact and evaluate borrowers’ applications for available loss mitigation options.

Black Knight emphasized that the raw numbers are still low overall despite the upticks. Forbearance plans remain 18% lower than last month after a flood of exits in October and early November. And up to 500,000 more exits could come through the remaining October/November and upcoming December expirations. Black Knight predicts half will be final expirations.

But research suggests those who are still in forbearance plans are the most vulnerable.

“The borrowers in the subprime credit score buckets are much, much more likely to have both entered forbearance, and still be in forbearance at this point,” Joelle Scally, a financial and economic analyst with the New York Fed, told CNBC.

The total number of mortgage holders in Covid-19 related forbearance is now 1.01 million.