- Last week, active forbearances dropped -18%, according to Black Knight
- As of October 6, 2.97M homeowners remain in COVID-related forbearance plans
- As of October 6, 5.6% of all active mortgages remain in forbearance, down from 6.8% previous week
Big news in the world of Covid-19 pandemic mortgage forbearance plans…as of October 6, 5.6% of all active mortgages remain in a pandemic-related forbearance plan, according to Black Knight. This is a substantial decrease from the week before, a drop of some -18%, when the percentage of active mortgages in forbearance plans totaled 6.8%.
Active forbearances dropped to 2.97M during the week ending October 6, the first time since April that the number of active forbearances was less than 3M. It was also the largest decline in the number of forbearances since the outbreak of the pandemic.
These 2.97M forbearance loans represent a total of $614B in unpaid principal.
(Refresher: Forbearances allow homeowners to delay their monthly payments for at least 30 days and up to one year. Borrowing plans from lenders usually are divided into three-month periods and borrowers can request a renewal of the forbearance loan at the end of each three-month period. Delayed payments can be made up when the loan is either refinanced or the house is sold. Most lenders do NOT require a lump sum repayment when the borrowers exit the forbearance plan BUT borrowers need to work out their own repayment plans with their lenders.)
Andy Walden, Black Knight economist and director of market research, said, “As the first wave of forbearances from April hit the end of their initial six-month terms, we’ve seen the strongest decline in the number of active plans since the pandemic began. Though the market continues to adjust to historic and unprecedented conditions, these are clear signs of long-term improvement.”
800,000 forbearance plans are expected to reach the end of their initial six-month loan period in the next 30 days.
Active forbearances in portfolio-held and private-labeled security loans fell by -24%; forbearances on Fannie Mae- or Freddie Mac-backed loans fell -16% and FHA/VA loan forbearances declined by -15%.
Thanks to CNBC.