Distressed

Foreclosure starts also fell, coming in below pre-pandemic pace, according to Black Knight.

Rising interest rates and emergence from pandemic contingencies could put increased strain on the ability to repay, but signs of near-term loan performance stress have been limited.

But a slower-than-anticipated rate of repossessions suggest distressed homeowners are finding solutions.

The opinion heightens the need for servicers to be careful about billing communications, particularly when a distressed loan or foreclosure is involved.

While the government-sponsored enterprise’s single-family mortgages are still not performing as well as they did before the pandemic, the most recent vintages are getting there.

But re-entries crept up, while the percentage of borrowers exiting plans without loss mitigation in place increased.

This move is in addition to the recent notice filed by the Department of Housing and Urban Development about its interest in creating a permanent 40-year option.

The numbers suggest depositories are finding it easier than non-depositories to qualify their borrowers for foreclosure prevention programs as forbearance recedes.

The move would align the Federal Housing Administration with other agencies, including Fannie Mae, Freddie Mac, the USDA, and the National Credit Union Administration.

The scheme highlights a risk that could grow as distressed borrowers exit forbearance.