Forbearances below 2m for 1st time in 15 months - big weekly drop

The number of active mortgage forbearance plans in the US dropped by 189,000 in the last week to below two million for the first time since April 2020, mortgage data provider Black Knight reported this morning (July 9).

This represents the highest weekly exit week in over six months.

Forbearances in mortgages held by banks and in private label deals led the way with a 78,000 reduction, while FHA/VA and GSE numbers dropped by 67,000 and 44,000 respectively.

Overall, US forbearance plans have dropped by 254,000, or 12%, over the last month, to a total of 1,862,000.

This significant decline seen in the previous seven days was underpinned by the large number of debt-holders which entered Covid forbearance early last year reaching the 15-month quarterly review.

By July 6, 1.86m, or 3.5%, of all mortgage-holders remain in Covid-related forbearance plans, including 2.2% of GSE loans, 6.8% of FHA/VA loans and 4.6% of private label loans. The total unpaid principal balance (UPB) of all loans in forbearance is now $365bn.

Some 582,000 GSE loans are in forbearance, with an UPB of $121bn. There are 760,000, or 6.3%, FHA/VA loans still in forbearance plans, with an UPB of $130bn. It is estimated that Fannie Mae and Freddie Mac spend $1.15bn monthly on principal and interest payments for loans in forbearance.

Another 400,000 forbearance plans will be reviewed for extension or removal in the next 30 days.

Black Knight was unavailable for comment.

Simon Boughey