Mortgage abstention forecasts clouded by the extension of the FHFA’s CARES law
The number of borrowers in forbearance is at its lowest level in 10 months, but compliant borrowers are now able to to deploy themselves their plans, it is not certain that this amount will decrease further in the near future, Black Knight noted.
There were 2.67 million borrowers, or 5% of the 53 million outstanding mortgages, in a forbearance plan on February 9, the least since mid-April last. These loans have an outstanding principal balance of $ 532 billion.
A week earlier, there were 2.71 million borrowers, or 5.1% of outstanding mortgages, with a UPB of $ 541 billion in a forbearance plan.
The declines during the last two weeks were motivated by plans expiring Jan.31, Black Knight said.
The Federal Housing Finance Agency February 9 announcement, which allows borrowers to request an additional three months of Fannie Mae and Freddie Mac loan relief at the end of this month, is expected to shake up forbearance outflow trends.
“Important unknowns remain, including the impact these expansions will have on the overall recovery,” wrote Andy Walden, Black Knight’s director of market research, in a blog post. “We have already seen evidence that forbearance is starting to erode borrower equity.”
Since early December, month-to-month declines have averaged less than 2%, he noted.
Now, with the FHFA extension, this could be further slowed down as around 30% of the existing abstentions for borrowers Fannie and Freddie were due to expire at the end of March.
If Ginnie Mae were to follow suit and extend the Federal Housing Administration and Veterans Affairs mortgage schedule on her securities to 15 months, at the current rate of improvement, there would still be some 2.5 million homeowners in arrears. in late June, when the first round reached its new 15-month expiration, Walden said.
The largest number of forbearance mortgages are government guaranteed products, with 1.11 million loans in one plan. But since loan amounts are generally lower than compliant loans, the UPB is only slightly higher, at $ 190 billion. The week before, there were 1.26 million FHA and VA loans in a plan with a UPB of $ 192 billion.
As for the forborne portfolio and private label mortgages – the granting of which is the responsibility of the manager and the investor – there are now 650,000 loans in one plan, with a UPB of $ 153 million. This category saw the largest week-over-week decline, as for the period ended Feb. 2, there were 680,000 of these mortgages in a plan with a UPB of $ 159 billion.