Holiday season’s COVID-19 spread leads to climbing forbearances

With COVID-19 infection rates and unemployment spreading since Thanksgiving, mortgages in coronavirus-related forbearance rose by 37,000, according to Black Knight. Just a week earlier they had decreased by 12,000.

Almost 2.79 million borrowers were in active plans as of Dec. 15. The outstanding loans represent a 5.3% share of all active mortgages, combining for an unpaid principal balance of $563 billion. These totals gradually descended from the late-May peak of over 4.76 million, 9% and $1.05 trillion. However, this week's increase can be credited to the trend of forbearance plan upticks in the middle of the month, according to Andy Walden, Black Knight economist and director of market research

"Since the recovery started, we’ve regularly seen the strongest declines early in the month, as expiring forbearance plans are removed," Walden said in the report. "With more than 550,000 plans still set to expire at the end of December, we could see more positive news in terms of plan removals in the first week of January. It bears repeating that COVID-19 cases continue to spike nationwide and unemployment claims have risen in recent weeks."

Active forbearances grew for each loan type. Government-sponsored enterprise loans gained 5,000 more forbearances from the week earlier, going to 970,000. Portfolio and private-label securitized loans — which don't fall under CARES Act coverage — rose by 14,000 to a total of 678,000 in forbearance plans. Forborne government loans — FHA and VA — shot up by 18,000, bringing its total to 1.139 million.

Black Knight's estimates show mortgage servicers will need advances of $3.4 billion in principal and interest payments and $1.2 billion due in taxes and insurance per month. Those divvy up to $1.1 billion and $400 million for Fannie Mae and Freddie Mac mortgages, $1 billion and $400 million for FHA and VA, and $1.2 billion and $400 million for private-label.