Active COVID-19-related forbearance volumes declined by a net 34,000 for the week ending on June 2, the first weekly decrease in forbearance volumes since the coronavirus pandemic hit and the CARES Act went into effect, according to data released on Friday by fintech company Black Knight, Inc.
“After rising sharply in April and then leveling off toward the end of May, the number of American homeowners in forbearance plans has now decreased for the first time since the crisis began,” Anthony Jabbour, Black Knight CEO, said in a statement.
“There were a net 34,000 fewer homeowners in forbearance as of June 2,” Jabbour said. “The decline was actually greater among government-backed mortgages, which saw 43,000 fewer total forbearance plans than last week, but this was partially offset by an increase of 9,000 new plans on mortgages held in bank portfolios and private-label securities.”
Black Knight has been monitoring the effects of the pandemic on U.S. markets daily by tracking loan-level forbearance and performance data with its McDash Flash data set and the McDash Flash Payment Tracker.
The new data also shows that the 4.73 million loans currently in forbearance represent 8.9 percent of all active mortgages and make up about $1 trillion in unpaid principal. Currently, about 7.1 percent of all Government-Sponsored Enterprise (GSE) backed loans and 12.3 percent of Federal Housing Authority (FHA) and U.S. Department of Veteran’s Affairs (VA) mortgages are in forbearance.
Although last week’s forbearance volumes data showed positive signs, Jabbour noted that additional data pulled from the McDash Flash Payment Tracker may be a harbinger of less hopeful news for forbearance rates in the near future, not to mention the impending end date of unemployment benefits on July 31.
“There are still concerning signs in the data,” Jabbour said in a statement. “According to Black Knight’s McDash Flash Payment Tracker, far fewer homeowners in forbearance remitted May payments than did in April. If that trend holds true through the end of the month, the market should be prepared for another likely rise in the delinquency rate for May. Also, expanded unemployment benefits are scheduled to end on July 31. It remains to be seen how that will impact both forbearance requests and overall mortgage delinquencies.”