Forbearance Plan Removals Could Increase in January

As of December 29, 2.83 million (5.3% of) homeowners remain in COVID-19-related forbearance plans, according to Black Knight's McDash Flash Forbearance Tracker.

Mortgages in forbearance programs increased for a third consecutive week. Loans in active forbearance are up by 15,000 for the week ending December 29 from the previous week. This latest report from Black Knight showed the highest level of forbearance plans overall since early November.

Broken down by type of loan, FHA and VA forbearances increased by 11,000 from the prior week. Portfolio and PLS forbearance plans increased by 4,000. Fannie Mae and Freddie Mac (GSE) plan numbers did not change during the last reported week.

Numbers as of December 29:

  • 3.5% (964,000) of GSE mortgages
  • 9.6% (1.16 million) of FHA/VA loans
  • 5.4% (700,000) of portfolio-held and privately securitized loans

The main cause of the week's elevated numbers, according to Black Knight, is limited forbearance plan removal activity, with removals dropping to their lowest levels since the start of the COVID-19 pandemic. Low removal numbers ostensibly are due, at least in part, to the holidays, the researchers noted.

Conversely, the week also included fewer entrances into forbearance plans.

"On a bright note, forbearance plan starts also hit their lowest level since the start of the pandemic, a number also likely impacted by the holidays. Start volumes have now fallen in each of the last three weeks," wrote Black Knight blogger Andy Walden.

Despite the consecutive weekly increases in overall forbearance activity, the number of active forbearance plans is up just 13,000 from this time last month.

"With nearly 270,000 forbearance plans still set to expire at the end of December, it’s possible that we could see an inflow of forbearance plan removals over the first week of January," the researcher noted.

Here is a look at the rate of forbearance activity since the March 2020 onset of the national health crisis:

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