3M homeowners remain in forbearance

80% of deferment plans have been extended, according to Black Knight

The number of mortgage borrowers in Covid-19 forbearance plans ticked down again this week. (iStock)
The number of mortgage borrowers in Covid-19 forbearance plans ticked down again this week. (iStock)

Nearly 3 million U.S. homeowners were in forbearance programs as of this week, a massive amount but still a sharp drop from 4.76 million at the height of the pandemic.

That’s according to a new report from mortgage-data firm Black Knight, which also found significant drops in weekly totals. There were 11,000 fewer homeowners in Covid-19 mortgage forbearance programs with their lenders than the week prior.

Loans backed by Fannie Mae and Freddie Mac, as well as portfolio-held and privately securitized loans, all saw decreases in forbearance volume. But there was an increase among mortgages held by the Federal Housing Administration and the Department of Veterans Affairs.

The figures build on an overall 17 percent decrease in forbearance since September, representing a decrease of 623,000 applications month-over-month.

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Forbearance programs for both residential and multifamily property owners were introduced earlier this year by lenders — or mandated by state governments, as in the case of New York, in response to the pandemic. Most borrowers who have forbearance agreements have chosen to renew them, as 80 percent of forbearance plans have had their terms extended, according to the report.

Still, Black Knight found that as of September, at least 1 million borrowers were 30 days past due on their mortgages and not in a forbearance program. Of those, 680,000 have federally guaranteed mortgages and therefore qualify for a forbearance plan. While the rest do not, some lenders offered forbearance regardless.

While many struggling homeowners did not request forbearance plans, some lenders put mortgages into forbearance without consulting the borrowers. Researchers at the Committee for Better Banks found that banks sometimes offered forbearance as the only option to homeowners — at times requiring balloon payments at the end of the grace period.

In August, Wells Fargo was sued for placing borrowers’ mortgages into forbearance without their knowledge, which affected their credit scores.