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Forbearances Experience Record Decline as Initial Plans Expire
Friday, October 9, 2020
The
number of forbearance plans plunged last week as those that went into effect in
the early days of the pandemic hit the end of their initial six-month terms. Black Knight said nearly one-fifth of the plans
ended, as the number fell by 649,000 mortgages or 18 percent of the previous
week's total. A total of 2.97 loans remain in forbearance. It
was the largest one-week decline, far outpacing the 435,000 drop when the first
wave of plans hit the three-month mark in early July. It would be interesting
to know how many of the formerly forborne borrowers from both waves had
continued to make their monthly payments, using the plans as an insurance
policy against potential financial difficulties. Such a possibility has been suggested
by both ATTOM Data Solutions and the Urban Institute. The
greatest reduction in plans was among loans serviced for portfolio loans and private
label securities (PLS). Those loans declined by 228,000 or 24 percent of the
total. Both GSE (Fannie Mae and Freddie Mac) loans and the FHA/VA portfolios
experienced downturns as well. The GSE portfolios are down by 213,000 loans or
16 percent and the FHA/VA by 208,000 or 15 percent.
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