Not since April end had mortgage forbearance dipped below 4 million. Well, it did just that for the week ending Aug 10, reports Black Knight. On August 3, the mortgage forbearance number was 1,000 over 4 million. This week, it has come down to 3.93 million, representing a fall of 71,000.
Forborne conforming mortgages backed by Fannie Mae and Freddie Mac came down by 27,000. It sat at 1.515 million on Aug 10. The drop corresponds to 1.8%. FHA and VA forbearance mortgages saw a dip of roughly 8,000.
According to Black Knight, mortgage servicers may require monthly advances to the tune of $4.8 billion (principal and interest payments) along with $1.8 billion (taxes and insurance). The corresponding figures for Fannie MAe and Freddie Mac are $1.7 billion and $700 million. For FHA and VA, they are $1.3 billion and $500 million.
Christopher Morrison, COO of Titles and Settlement provider, States Title stated that “Federally backed loans have been more flexible — they don’t require lump-sum payments if a borrower can’t afford it — but until that becomes a norm across all mortgages, forbearance remains a modest benefit to many homeowners,”.
Morrison further added that “For many people, the CARES Act provided a liquidity benefit for a limited amount of time, but they are still responsible for payments due in lump-sum immediately after their forbearance period is up. “This doesn’t fundamentally change things for many borrowers, especially if they’ve been laid off or furloughed as a result of COVID-19.”
The drops look good but are merely a representation of the succor that the CARES Act has offered rather than representing a real change in the economic picture of the country.