Milestone of the pandemic era: forbearance loans of less than 2 million euros
In Black Knight’s latest weekly forbearance reports, which tracks COVID-related forbearance activity since the start of the pandemic, researchers predicted a “bigger improvement” this week as 218,000 plans made the subject to quarterly reviews at the end of June. (They also said that what happens in early July “will largely dictate the outlook for the end of the year.”)
“Well, that bigger improvement came this week,” said Andy Walden, who writes the Black Knight weekly forbearance reports.
He says the total number of active plans fell by 189,000 Tuesday-Tuesday, dropping the number of owners registered for forbearance to less than 2 million for the first time since spring 2020.
Forbearance plan starts also fell again this week, reports Black Knight, with new and repeated housing starts plunging to a new pandemic-era low of less than 26,000.
All types of loans combined, 1.8 million collective borrowers benefit from abstention plans linked to COVID-19.
Loans from all categories of investors reduced their share of forborne borrowers.
Loans held in bank portfolios and private label securities reduced forbearance plans by 78,000. Federal Housing Administration and VA forbearance volumes fell by 67,000, and government-sponsored agencies fell by 44,000.
Almost two-thirds of plans reviewed for extension or discontinuation resulted in exits, marking the highest weekly exit rate in over six months and the highest weekly deletion volume since the first wave of plans went into effect. reviewed over 12 months a few months ago, reports Black Knight.
On a monthly basis, overall activity is down 254,000 or 12% from the same period last month.
As of Tuesday, around 1.86 million homeowners remained in these COVID-related forbearance plans, accounting for 2.2% of GSE loans, 6.8% of FHA loans and 4.6% of private and portfolio loans.
Another 400,000 plans are expected to be considered for extension or deletion in the coming month.
In this month’s print edition of DS News, Nadim Homsany, CEO of Fintech EarnUp, presented technology tips for providers helping borrowers exit forbearance plans.
“Homeowners who remain in forbearance are likely to face ongoing challenges such as job losses, reduced income and other pandemic-related hurdles … further complicated [by] the expiration of extended unemployment benefits and the moratoriums on foreclosures, ”he wrote. “As a result, when this next group hits their forbearance deadlines, they may have more difficulty repaying their loans than their predecessors. “
He recommends four different repayment options based on “the wide range of lender policies, the financial health of the borrowers, and the ability of a service agent to service each loan.”
The Consumer Financial Protection Bureau recently released new rules for the default service aimed at creating “a significant opportunity to seek loss mitigation options” within the mortgage industry.