Loans in forbearance gain after 6 weeks of decline
After six weeks of steady declines, the number of mortgages in active forbearance rose by 21,000 last week, according to a new report.
Though the raw number increased, the number of all mortgages in active forbearance remained at 6.8%, unchanged from the week prior, Black Knight said in a report on Friday.
As of Sept. 29, 3.6 million homeowners remain in COVID-19-related forbearance plans representing $751 billion in unpaid principal.
According to the report, the portfolio-held and private labeled security loans were largely responsible for the recent increase, with forbearance share gaining from 7.1% to 7.3% – a total of 28,000 new loans in forbearance.
The rate for home loans in Ginnie Mae securities, primarily mortgages backed by the Federal Housing Administration or the Veterans Administration, also rose by 2,000, to 11.2% from 11.1%.
The forbearance rate for mortgages backed by Fannie Mae and Freddie Mac helped to offset the gains by a 9,000 decline in GSE forbearances – falling from 4.8% to 4.7%.
Despite the slight uptick, active forbearance volumes are now down by 305,000 (-8%) over the last month. GSE and portfolio/private loans experienced stronger declines having each fallen by 10%, with a more modest 4% decline among FHA/VA loans, the report said.
Of the 3.6M loans still in active forbearance, more than 75% have had their terms extended at some point since March, the report said.
Black Knight estimates significant extension and removal activity over the next few weeks as more than a million forbearance plans are set to expire in September – with another million in October.
An August report of accounts in financial hardship by TransUnion revealed while 53% of respondents reported making normal payments on their mortgage loans, 14% claimed they don’t know how they are going to pay their next bill.
According to Matt Komos, vice president of research and consulting at TransUnion, consumers who still remain in hardship are at higher risk to face income losses and thus have more difficulty exiting these programs than consumers who may have entered into hardship programs as a precautionary measure.
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