Forbearance Numbers Continue to Retreat

The number of homeowners in active forbearance plans fell again this past week. Black Knight estimates there are now 4.6 million people remaining in the plans which mortgage servicers are required to provide as part of the CARES Act package of COVID-19 economic relief. Those plans allow homeowners who claim a financial impact from the pandemic to temporarily skip or make partial mortgage payments.

The June 16 count represents 8.7 percent of all active mortgages, down by 57,000 and 0.1 percentage point from the previous week. It is 158,000 fewer plans than at the peak during the week of May 22.

The current plans represent just over $1 trillion in unpaid principal ($1,012 billion). Some 6.8 percent of all GSE-backed loans and 12.1 percent of all FHA/VA loans are currently in plans.

While the number of government-backed loans in plans are declining, GSE loans fell by 51,000 and VA/FHA loans by 11,000, those serviced for others continue to grow. There was an increase of 6,000 last week in portfolios serviced for portfolio lenders, private label securities, and other non-agency investors.

Servicers of government-backed loans are required to advance principal and interest (P&I) payments to investors even when borrowers are not paying mortgages and must also cover taxes and insurance (T&I) premiums. Black Knight estimates that, even with the reduced number of plans, servicers still need to advance a combined  $3.4 billion per month in P&I payments to holders of government-backed securities for the forborne loans and another $1.4 billion in T&I payments. Servicers of "other" loans may be obligated for up to $2.1 billion in P&I and $700 million in T&I advances.

The Federal Housing Finance Agency has capped P&I advances from servicers of GSE loans at four months, but that still leaves their obligations over that period at $8.4 billion. T&I payments are not capped.