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Number of mortgages in active forbearance sees weekly rise

Mortgage forbearance participation increased for the second consecutive week as the number of loans receiving assistance rose by 20,000. Participation saw a decline over the summer and into the fall, but has stalled over the last few months.

For the second consecutive week, the number of mortgages in active forbearance increased from the week before, according to Black Knight.

The report, including data through January 26, found that just 41,000 borrowers stopped receiving assistance with their loan – one of the three smallest “exit totals” since this past summer.

While the end of the month should bring a fresh wave of expiring plans, the past two weeks’ reports and the broader trend in mortgage forbearance participation suggest people’s ability to keep up with monthly payments has suffered lately. The budding weakness is most pronounced in government loans (FHA and VA mortgages) and those issued by private lenders, with forbearance up by 9,000 and 15,000 loans, respectively, on the week. 

Fiscal policy can assist in limiting the risk of foreclosures posed by some receiving assistance (government loans and those held by Fannie Mae and Freddie Mac), and protection for FHA loans was extended earlier this week by six-months from the initial term.

However, offering widespread protections to privately held loans is more difficult because it comes down to banks and other private mortgage servicers voluntarily offering assistance.