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More Evidence That Forbearance is Widely Being Taken as a Precaution
Friday, May 22, 2020
The number of homeowners in mortgage
forbearance plans continues to increase, reaching 4.75 million by May 19. This
is 9.0 percent of all active borrowers nationwide and represents a little more
than $1 trillion in unpaid principal. The number of plans grew by 93,000 borrowers
between May 12 and May 19. Black Knight, in its weekly report
on the forbearance program, offered to homeowners who have been financially impacted
by the COVID-19 pandemic, notes that the most recent increase is down 70
percent from the 325,000 new plans during the first week of May, and is 93
percent lower than the 1.4 million plans opened the first week of April. This
slowdown suggests that volumes may be beginning to flatten, warranting a shift
in servicer focus from forbearance pipeline growth to forbearance pipeline
management. It appears
that some homeowners may have, at least initially, requested a forbearance plan
as a precaution. Black Knight says that about 46 percent of borrowers in
forbearance at the end of April, 4.25 million in number, made that month's
payment while 54 percent did not. Some made full payments, keeping the
forbearance as a safety net in case the bottom drops out, while some made
partial payments so as not build upon a growing amount that will ultimately
need to be repaid.
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