Forbearances Drift Lower for Second Week in a Row

The number of homeowners with mortgages in forbearance has fallen for the second consecutive week. Black Knight reports that, as of June 9, there were 4.66 million active COVID-19 related forbearance plans. This is 77,000 fewer than the previous week and down by 112,000 homeowners at the May 22 peak. The current number represents $1,03 billion in unpaid principal balances.

Servicers now have 8.8 percent of their total portfolios in plans, down from 8.9 percent the previous week. This breaks down to 7.0 percent of all Fannie Mae and Freddie Mac (GSE) guaranteed mortgages and 12.2 percent of FHA/VA loans.

Loans serviced for the GSEs saw the greatest reduction, with plans declining by 47,000 week-over-week to 1.95 million loans with an unpaid balance of $411 billion. The number of FHA/VA loans fell from 1,491 million to 1.478 million. After rising last week, the number of plans among those loans serviced for others (portfolio loans, private label securities) also declined, from 1,247 million to 1.232 million, 9.5 percent of those portfolios.

Black Knight estimates that, at today's level, mortgage servicers need to advance a combined $3. 5 billion per month in principal and interest (P&I) payments on COVID-19-related forbearances to holders of government-backed mortgage securities. That's on top of the $1.5 billion in taxes and insurance payments they must make on behalf of borrowers. Servicers of other loans may be obligated for $2.1 billion in advanced P&I and $0.7 billion in T&I payments each month. While P&I payments on behalf of GSE backed loans have been capped at four months, their servicers still face up to $8.8 billion in advances over that four-month period.