As of July 7, 4.14 million homeowners were in active forbearance, representing 7.8% of all active mortgages, down from 8.6% the week prior. Together, they represent just under $900 billion in unpaid principal.
Some 6% of all GSE-backed loans and 11.6% of all FHA/VA loans are currently in forbearance plans. Another 8.2% of loans in private label securities or banks’ portfolios are also in forbearance. The largest declines in forbearances were seen among GSE loans, which declined by 200,000–an 11% reduction in a single week. Portfolio and PLS loans in forbearance also fell by 11%, equating to 136,000 fewer active forbearance plans.
FHA/VA saw the slightest improvement, declining just 6% for a 93,000 reduction.
What’s behind this latest decline? Andy Walden, economist and director of market research for Black Knight, says that the “latest decline in the number of homeowners in active forbearance is an encouraging sign of continued improvement. The reduction of roughly 435,000–the largest single-week drop yet–was driven at least in part by the fact that more than half of all active forbearance plans entering the month were set to expire at the end of June. While the majority of those have been extended, this week's data suggests a significant share were not."
Recent spikes in COVID-19 around much of the country and the scheduled expiration of expanded unemployment benefits both represent significant uncertainty for the weeks ahead.