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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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