The increase amounts to a single basis point, from 8.30% to 8.31%.
While the data suggests that the rate of forbearance is stabilizing, Black Knight also noted that loan delinquencies remain at elevated levels. The percentage of loans delinquent by 30 days or more in November was 5.68%, up 13 basis points from the previous month.
The analysis includes more than 43 million mortgages serviced across the country, representing approximately 80% of all active mortgage loans. While the current figure is lower than at the peak of the pandemic, when more than 4 million borrowers had taken advantage of forbearance plans, it is still higher than it was prior to the onset of COVID-19.
In terms of who is most likely to take advantage of forbearance, Black Knight’s data shows that the majority of borrowers are taking a “wait-and-see” approach. Most of those entering into forbearance are doing so for the first time, and the number of repeat requests is decreasing. The data suggest that borrowers may be using forbearance as a way to buy time while they evaluate their options.
Another key takeaway from the report is that government sponsored entities (GSE) such as Fannie Mae and Freddie Mac have been more proactive in offering relief to their borrowers. According to Black Knight, GSE-backed loans represent more than 40% of all active mortgages and account for almost half of all loan modifications.
The data is a reminder that while the government has responded quickly and effectively to the financial crisis caused by COVID-19, there is still work to be done. The rise in delinquencies among US mortgages in November is a reminder that the country continues to grapple with the fallout from the pandemic. Though mortgage forbearance has risen slightly since the beginning of the pandemic, it is still much higher than pre-pandemic levels, indicating that many borrowers remain vulnerable to economic distress.
The analysis released by Black Knight is important for those in the industry as it provides an updated snapshot of the situation in the US mortgage market. The report notes that loan delinquencies remain at an elevated level, and that GSEs have been more proactive in offering relief to their borrowers. It also offers insight into the behavior of borrowers, who appear to be approaching forbearance cautiously, as a way to buy time while they evaluate their options. Finally, the report serves as a reminder that while the government has responded quickly and effectively to the crisis, there is still work to be done, as many borrowers continue to struggle under the weight of economic turmoil.
This article was contributed on Oct 14, 2023
