Over 6% of All Mortgages Now in  Forbearance

Mish

Mortgages in forbearance are on a steep rise due to Covid-19.

Black Knight released the following points regarding mortgage forbearance.

  • According to the Black Knight McDash Flash Forbearance Tracker, as of April 23, 2020, more than 3.4 million homeowners – or 6.4% of all mortgages – have entered into COVID-19 mortgage forbearance plans
  • This population represents $754 billion in unpaid principal and includes 5.6% of all GSE-backed loans and 8.9% of all FHA/VA loans
  • At today’s level, mortgage servicers are bound to advance $2.8 billion of principal and interest payments per month to holders of government-backed securities on COVID-19-related forbearances
  • Another $1.3 billion per month in lost funds is faced by those with portfolio-held or privately-securitized mortgages
  • Ginnie Mae had announced a pass through assistance program through which it will advance principal and interest payments to investors on behalf of servicers and FHFA very recently announced that P&I advance payments will be capped at four months for servicers of GSE-backed mortgages.
  • Given FHFA’s recently announced four-month limit on advance obligations, servicers of GSE-backed mortgages could still face more than $7 billion in advances based on the number of forbearance plans thus far
  • Regardless of a borrower’s forbearance status, servicers of loans in government-backed securities must make advance principal and interest (P&I) payments each month for these loans. 

Forbearance Totals

Mortgage Forbearance Totals 2020-04-23

Estimated Monthly Advances

Estimated Monthly Advances 2020-04-23

For now, advances from GSE servicers will cover forbearances. 

But only for 4 months and it will not cover any losses from those advances.

Servicers of lenders of non-GSE loans have additional issues.

Mish

Comments (17)
gregggg
gregggg

6% this early in the game tells me these people opting for forebearence were in trouble long before COVID 19.

Six000mileyear
Six000mileyear

How does the mortgage delinquency / default / forebearance numbers compare to those leading up to the Great Recession?

Maximus_Minimus
Maximus_Minimus

Is it possible that most of those 6% wouldn't even be originated in a free market system where losses aren't socialized through GSEs?

Sequoia
Sequoia

This will end up making the last housing crisis look like a walk in the park. Why it is different this time.
1)The illegals will self deport. All the construction, hotel maid jobs, restaurant and gig jobs are gone. Which will hurt apartments and housing.

2)Everybody everywhere is just as broke as we are. There will be no Chinese or Russian billionaires laundering money through housing.

  1. The baby boomers are downsizing either to condos, nursing homes or coffins.

  2. Food is about to get extremely expensive and scarce as a Little Ice Age from the Eddy Grand Solar Minimum kicks in.

  3. This bubble is just too big and we are just too broke. The FED will eventually protect the dollar, over stawks and used homes. What good are high valuations in a dead currency?

Sequoia
Sequoia

Interesting my comment looks different when it submits.

Jdog1
Jdog1

This is going to get really ugly. I expect most people applying for forbearance are going to end up defaulting when the balloon payment for the forbearance comes due and they cannot refinance because home values have fallen below their loan balance. Debt default is becoming a tsunami, worldwide, and it is going to cause deflation on a scale most people can not even imagine.


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