With limited forbearance removals due to the holidays, mortgages in coronavirus-related forbearance rose by 15,000 at the end of December, according to Black Knight.
This increase follows growth of 20,000 and 37,000 in the prior two weeks, but only sits 13,000 higher month-over-month. Removal activity fell to the lowest level since the start of the pandemic, according to Andy Walden, Black Knight economist and director of market research.
“On a bright note, forbearance plan starts also hit their lowest level since the pandemic began, a number also likely impacted by the holidays. Forbearance start volumes have now fallen in each of the last three weeks running,” Walden said in the report. “With nearly 270,000 forbearance plans still set to expire at the end of December, it’s possible that we could see an inflow of forbearance plan removals over the first week of January.”
About 2.83 million borrowers sat in active plans as of Dec. 29. The forborne mortgages represent a 5.3% share of all active home loans, with a combined unpaid principal balance of $568 billion. Forbearances stemming from COVID-19 peaked in May at 4.76 million plans, representing a 9% share of all loans and a $1.05 trillion UPB. In late December, forbearance activity increased for each loan type from the week before. Government-sponsored enterprise loans inched up by 1,000 to a total of 964,000. Loans backed by the FHA and VA shot up by 15,000, bringing its total to 1.164 million. Portfolio and private-label securitized loans — which don’t fall under CARES Act coverage — rose by 5,000 to a total of 700,000 in forbearance plans.
Black Knight’s estimates show mortgage servicers need to advance $3.4 billion in principal and interest payments and $1.3 billion due in taxes and insurance per month. Those break down to approximately $1.1 billion and $400 million for Fannie Mae and Freddie Mac mortgages, $1.1 billion and $400 million for FHA and VA, and $1.2 billion and $400 million for private label.
