Forbearance starts hit one-month high amid plateau in overall plans

New payment-relief requests rose to their highest level since early October as overall forbearances stayed at about the same level as the week before, as typically occurs mid-month, according to Black Knight’s latest report.

Overall forbearance was up slightly by 2,000 or 0.2% at nearly 1.02 million on a net basis during the week ended Nov. 16, driven by a 5,000 increase in plans for private loans combined with the uptick in new requests, which was driven by government mortgage activity. Loans in private securitizations or bank portfolios aren’t subject to the same programmatic forbearance requirements as federal mortgages. New requests overall rose to 12,200 from 10,700 the previous week. Initial plan filings haven’t been that high since the week ending Oct. 5, when they totaled 15,100.

Activity in loans insured by the Federal Housing Administration and guaranteed by the Department of Veterans Affairs drove the surge in new forbearance plans, according to Black Knight. Federal housing agencies extended their deadline for new plans in early October, so the increase seen in FHA and VA loans suggests that extension may be boosting activity.

However, forecasts continue to call for the total number of forbearance plans to keep dwindling on a net basis as many near the end of their terms.

“Overall, the number of forbearance plans is still down by 230,000 (-18%) from the same time last month, with the potential for additional improvements as we enter December,” said Andy Walden, vice president of market research, in a Black Knight blog. “More than 200,000 plans remain with October/November reviews for extension/removal and nearly 300,000 more are slated for review in December — half of which are expected to be reaching their final expirations.”

Just 1.9% of all mortgages remain in forbearance, according to Black Knight. The forbearance share is highest in the FHA/VA market at 3.1%, followed by PLS/portfolio loans (2.4%) and mortgages purchased by government-sponsored enterprises Fannie Mae and Freddie Mac (1.2%).

Although new plan requests for FHA/VA loans rose in the past week, overall forbearance in that category dropped slightly (0.5%) on a net basis by 2,000. Forbearance in the GSE market also registered a decline (0.3%), falling by 1,000.