The number of COVID-19 related forbearance
plans in effect with servicers continued to increase through the end of April
according to a report released on Friday by Black Knight. Forbearance is the temporary
suspension or reduction of a required payment. As of April 30, more than 3.8
million home mortgages, 7.3 percent of all active obligations, are in such
plans. In comparison, as of April 23 affected 3.4 million loans or 6.4 percent
of the total. The current forbearances account for $841 billion in unpaid
principal, up from $754 billion the prior week.
Within the 3.8 million loans
are 1.699 million that are backed by the GSEs Fannie Mae and Freddie Mac and
1.268 million by FHA and the unpaid principal balance of these loans total $372
billion and $232 billion, respectively. Loans serviced by others total 863,000 and
an unpaid balance of $236 billion.
It is worth noting that mortgage
payments are typically due on the first of each month. Since the massive business
closures and unemployment claims began in mid-March, only the April payment has
been required.
Servicers of government-backed loans
are required to continue making monthly advance principle and interest payments
to investors in securities collateralized by the loans even when borrower
payments are not received. Black Knight estimates this as a monthly outlay of
$3 billion. Servicer of portfolio-held or privately securitized mortgages could
face $1.5 billion in advance payments.
Ginnie Mae has announced a
pass-through assistance program in which it will advance principal and interest
payments on behalf of the servicers to investors of loans it guarantees (FHA,
VA, and USDA loans) and the Federal Housing Finance Agency (FHFA) has capped
servicers' advance payment obligation at four months for GSE-backed loans. Even
with this cap, servicers of the GSE loans in forbearance today may be required
to advance nearly $8 billion over that four-month period. Another $1.7 billion
may be required each month to keep taxes and homeowners' insurance premiums
current for loans of all types with escrow accounts that, due to forbearance,
are no longer being funded by homeowners.
Black Knight says its information for
the report comes from its McDash Flash Forbearance Tracker. It extrapolates a
sample set of loans to reflect the mortgage servicing universe. It believes its
data represents the majority of the active mortgage market.