The share of mortgage loans in forbearance remains unchanged according to the latest Forbearance and Call Volume Survey (Mortgage Bankers Association)
- TOTAL LOANS now in forbearance remained unchanged relative to the prior week at 5.38%
- INITIAL STAGE: Loans in the initial forbearance plan stage makeup 18.07% of total loans in forbearance
- EXTENSION: 79.30% of loans are in a forbearance extension.
Mike Fratantoni, MBA’s Senior Vice President and Chief Economist explains why some economists are worried, “While new forbearance requests dropped slightly, the rate of exits from forbearance was at the slowest pace since MBA began tracking exit data last summer.”
Black Knight released its latest Mortgage Monitor Report for December 2020 which found that the 12-month expiration point for many forbearance plans is quickly approaching. (Black Knight)
- DEADLINE: Black Knight Data & Analytics President Ben Graboske notes that March could be an inflection point for the industry.
- WHY? Graboske explains in a statement, “The vast majority of plans have a 12-month cap on payment forbearance, though. And the various moratoriums which have kept foreclosure actions at bay over the past 10 months may be lulling us into a false sense of security about the scope of the post-forbearance problem we will need to confront come the end of March.”
- CURRENT RATE: At the current rate of improvement there would still be approximately 1.5 million more serious delinquencies at the end of March.
THE GOOD NEWS: Congress is currently working a new relief package. They are obviously aware of the forbearance data and the likely hood of them not addressing this in some way seems slim to none.
MORE GOOD NEWS: In December, Redfin argued in a press release that the foreclosure crisis was overblown (Redfin)
- APPRECIATION: Redfin Chief Economist Daryl Fairweather said in a statement, “American homeowners have gained $2 trillion dollars in home equity since the beginning of the pandemic alone.” Meaning, if someone can’t make their mortgage payments they are more likely to sell their home and cash in on their equity than to let it go into foreclosure.
- INVENTORY: Fairweather also noted that the lack of supply will cushion the blow, “an impending wave of foreclosed homes will only make a small dent in the inventory drought. First-time homebuyers and investors will likely quickly buy up any foreclosed homes, leaving the larger housing market unimpacted.”