More than 3.4 million homeowners were now in forbearance as of Thursday, representing 6.2% of all mortgages, according to analytics firm Black Knight.
Together, the mortgages in forbearance account for $754 billion in unpaid principal and include 5.6% of all GSE loans and 8.9% of all FHA/VA loans. The number of loans in forbearance was also up by about half a million from Black Knight’s previous estimate the week before.
The growing number of loans in forbearance also represents a growing problem for servicers, who must make advance principal and interest payments each month on the loans they service. Although the Federal Housing Finance Association recently announced a rule limiting the number of months a servicer would have to make advance payments, it still works out to a hefty price tag, Black Knight reported.
“At today’s level, mortgage servicers would need to advance a combined $2.8 billion [per] month to holders of government-backed mortgage securities on COVID-19-related forbearances,” said Mitch Cohen, director of public relations for Black Knight. “Another $1.3 billion in lost funds will be faced each month by those with portfolio-held or privately securitized mortgages (some 5.7% of these loans are in forbearance as well).
“Ginnie Mae had announced a pass through assistance program through which it will advance principal and interest payments to investors on behalf of servicers, and FHFA very recently announced that P&I advance payments will be capped at four months for servicers of GSE-backed mortgages,” Cohen said. “Even so, given today’s number of loans in forbearance (and these numbers are climbing every day), servicers of GSE-backed loans still face more than $7 billion in advances over that four-month period.”