Some 650,000 homeowners have been scheduled to leave forbearance plans over September, October and November.
Forbearance Plans on the Way Out
More than 300,000 homeowners were scheduled to exit forbearance plans in September, 210,000 in October and 137,000 homeowners in November for a total of approximately 650,000.
Experts are not expecting these forbearance exits to produce an uptick in foreclosed homes entering the for-sale housing marketplace. Why? Loan servicers MUST connect with borrowers who are 120 days behind on their mortgage payments and give them an opportunity to apply for assistance, such as a loan modification.
Additionally, double-digit annual home price appreciation during the pandemic means that many borrowers have more home equity. That increased home equity, even on homes in which borrowers are behind on their mortgage payments, could help them avoid foreclosure.
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Comparative Analysis of Homeowners in Forbearance in 2009-2010 and in 2021
Black Knight has estimated that just 7% of homeowners in forbearance who have been deferring their mortgage payments for 18 months have less than 10% equity in their homes.
Black Knight also estimated that high-equity borrowers are more than 40% less likely to lose their home via foreclosure, deed-in-lieu or short sale than borrowers with weaker equity positions.
Overall, Black Knight tracked 141,955 homes at some stage in the foreclosure process at the end of August.
Now compare this 141,955 tracked homes with the foreclosure starts that peaked at 323,000 in March 2009 and with homes in foreclosure hitting a high of 2.3M in December 2010.
Sizable Drop in Active Forbearance Plans
During the week ending October 5, the number of forborne borrowers dropped by 11% or 177,000.
This was the largest one-week drop in 12 months.
The volume of active forbearances now sits at 1.39M, down from 1.57M one week earlier.
Thanks to Black Knight, National Mortgage News and Inman.
