The number of mortgage loans in active forbearance has decreased for the second straight week, according to new data from Black Knight.
As of June 9, 4.66 million homeowners have mortgages in forbearance plans, down 77,000 from the week prior and 112,000 from the peak hit the week of May 22. Loans in forbearance now make up 8.8% of all active mortgages, slightly down from 8.9% last week, according to Black Knight’s estimates.
Loans backed by Fannie Mae and Freddie Mac account for some 1.95 million of those loans, a roughly 42% share. Another 1.48 million (32%) forborne mortgages are loans issued through Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) programs. Seven percent of mortgages backed by the government-sponsored enterprises (GSEs) are now in forbearance, as well as 12.2% of all FHA/VA loans.
Despite GSE-backed mortgages accounting for the largest share of loans in forbearance, they also saw the largest drop, with forbearances in the category declining by 47,000 week over week. In fact, all investor classes saw decreases in forbearance volume — another positive sign, compared to the week prior, when a decline in forborne government-backed loans was somewhat countered by growth in forborne mortgages in bank portfolios and private-label securities.
Loans currently in forbearance represent about $1.03 trillion in unpaid principal. At the present level, servicers would need to advance a combined $3.5 billion per month to government-backed mortgage securities investors to cover coronavirus-related forbearances, not counting the $1.5 billion in property tax and insurance payments they would have to make on behalf of borrowers.
That $3.5 billion figure includes an estimated $2.2 billion per month from servicers of GSE loans. While the Federal Housing Finance Agency has said that servicers of GSE mortgages are only obligated to advance principal and interest payments for such loans for four months, that means that those servicers would still be on the hook for up to $8.8 billion in advances over that four-month timeframe.
