While the total number of mortgages in forbearance fell for the third consecutive week, there was once again an increase in nonagency mortgages currently in a plan, according to Black Knight.
It’s the second time within a three-week stretch that such an increase has been recorded. Borrowers of forborne non-agency loans
As of June 16, there were 4.6 million mortgages of all investor types in forbearance, down by approximately 57,000 from 4.66 million
But portfolio and private-label mortgages in a plan increased by 5,000 on a unit basis to 1.237 million over that time frame.
On the other hand, the number of conforming mortgages in forbearance fell by over 50,000 to 1.9 million, while
Measured by unpaid principal balance, there are now $1.012 trillion of mortgages in forbearance status, down from $1.028 trillion the previous week.
The Biden administration once again extended the pause on student loan payments enacted to help borrowers during the COVID-19 pandemic, this time through the end of August.
The two states' combined plans amount to over $1.5 billion of the Homeowner Assistance Fund included within the American Rescue Plan Act , which was passed a year ago.
An uptick in pandemic-related payment suspensions reflecting new or restarted plan activity previously occurred as the omicron variant spread, but activity has since subsided.
Currently 8.7% of all outstanding mortgages in a plan. But the share of FHA and VA mortgages in forbearance is a bit higher, at 12.1%, while 9.5% of private-label loans are in a plan. Only 6.8% of Fannie Mae and Freddie Mac mortgages are in forbearance.
Black Knight now estimates that mortgage servicers will have to advance $5.6 billion each month in principal and interest payments and an additional $2.1 billion of taxes and insurance that are due. The T&I estimate is unchanged from the previous week, while the P&I is approximately $100 million lower.
"The number of borrowers asking for and entering forbearance appears to be leveling off," wrote Jim Cameron, senior partner at Stratmor in the consulting firm's June Insights Report, which was released prior to the latest Black Knight data. "Concerns over liquidity for nonbank lenders have alleviated somewhat. And with rates at all-time lows, refinance transactions at very strong levels and purchase mortgage transactions slowly rebounding, mortgage originator profits are very strong right now, bolstering liquidity and capital levels."
Back in April, Randy Binner, an analyst for B. Riley FBR projected that
"The broad expectation was that forbearance requests, and thus delinquencies (noncurrent paying residential mortgages) would swiftly increase into the double-digit percentages," Binner said in a June 18 report covering the private mortgage insurers along with the GSEs.
Instead, the forbearance rate for GSE mortgages held steady over the prior three weeks to his report's issuance, which cited the Mortgage Banker Association's figures in the area of 6.4% (Black Knight's data has been in the 7% range for the same period).
That is a positive for the future when it comes to managing forbearances, especially for the mortgage insurers. "Economic pressure will remain on mortgage borrowers over time, but this trend is clearly favorable," Binner said.
