Forbearance numbers fall to 2.74 million – Black Knight

Decline represents a troubling slowdown in improvement rate, company says

Forbearance numbers fall to 2.74 million – Black Knight

Following three straight weeks of gains, the number of mortgages in active forbearance in the US dropped by 92,000, or 3%, over the first week of 2021

The decline marked the largest week-over-week drop since early November, according to Black Knight, and was primarily driven by the quarterly forbearance plans reaching their expiration.

As of January 5, Black Knight estimated that 5.2% of all mortgages (2.74 million homeowners) are in some form of forbearance – representing $547 billion in unpaid principal.

All investor classes posted week-over-week declines, with FHA/VA forbearances down by 2.8%, GSE-backed loans down by 3.3%, and loans held in private-label securities or banks’ portfolios down by 3.9%.

However, Black Knight noted a “troubling slowdown” in the rate at which borrowers are exiting forbearance plans.

The 3% drop in the first week of January fell starkly short of the 9% decline July had seen during the first quarterly wave of expirations. It also pales in comparison to the 18% decrease in the first week of October when plans started to reach six-month expirations.

While the monthly rate of decline has varied over the previous months due to fluctuations in expiration dates, forbearances have only improved by -1% in the past 30 days, compared to the -7.5% month-over-month average from June through November.

“December marked the last significant wave of quarterly expirations before the first plans begin to reach their 12-month points at the end of March,” Andy Walden, director of market research at Black Knight, wrote in a blog post. “As such, it’s likely we’ll see only modest improvement in overall forbearance volumes between now and then.”