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Forbearance Numbers Appear to Shrink, but There's a Catch

Friday, July 10, 2020   /   by Erik Bjorklund

Forbearance Numbers Appear to Shrink, but There's a Catch

The
number of mortgages in forbearance plans declined this past week for the first
time since the CARES Act
to address the COVID-19 pandemic was enacted. Black
Knight said its survey showed that there were 4.73 million homeowners, 8.9
percent of those with mortgages, in forbearance plans as of June 2. This is a
net decrease of 34,000 loans since May 28. The
number of approved plans, which allow homeowners to temporarily suspend or
reduce mortgage payments if they are financially impacted by the pandemic,
decreased by 43,000 among mortgages being serviced for Ginnie Mae (VA, FHA, and
USDA loans) and the GSEs Fannie Mae and Freddie Mac.  However, the number of forborne loans serviced
for others, such as private label securities or portfolio lenders grew by 9,000
loans. Black
Knight's survey tracks both the number of plans and those borrowers who make
payments, whether in plans or not. It also considers past due forborne accounts
as delinquent even though the CARES Act prohibits servicers from reporting them
to credit agencies
as such. In mid-May the company found that about 46 percent
of borrowers in forbearance at the end of April had made at least a partial
payment of that month's mortgage payment, apparently keeping forbearance as a safety
net.


 

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