AZ Forbearance Update (video) 12/9/2020

In this 12 minute video, Lydia Wietsma and I talk about the five things you need to know about forbearance. Time is short but there are options. Forbearance programs are available through the end of the year. Watch the full video for details.

We do these updates to help real estate professionals and consumers understand forbearance, to let struggling borrowers know that although experts are forecasting a tough winter, there are options.

One.

We have talked about 3 weeks creates a trend. Well, after two weeks in a row of slight forbearance count increases, we were closely watching the numbers. And this past week, they remained flat, unchanged at 5.54% of loans and roughly 2.8 million loans in a forbearance plan.

Initial stage forbearance plans decreased. Like the 2 weeks prior, this past week had increases in forbearance plan extensions and re-entries. Nearly 78% of all loans in forbearance are on extension.

The surging cases nationwide led experts to believe we would see forbearance numbers rising more than they have.

Two.

Of the cumulative forbearance exits for the period from June 1 through November 29, 2020:

• About 46% represented borrowers who continued to make their monthly payments during their forbearance period or made up the past-due amount when exiting their plan.

• 13% represented borrowers who did not make all of their monthly payments and exited forbearance without a loss mitigation plan in place yet.

• December marks the next large volume of expirations, with more than 1 million (39%) active plans currently set to expire.

• Based on the current distribution, approximately 175,000 forbearance plans will reach their 12-month expiration in January/February, with more than half a million reaching that expiration mark in March 2021

Of the nearly 6.5 million homeowners that have entered forbearance plans since the beginning of the pandemic, only 43% (2.77 million) remain in active forbearance as of mid-November.

Three.

Delinquencies: Keep in mind all loans in forbearance that are late are marked as delinquent they are not being penalized for being late.

Delinquencies improved in October, decreasing by 3.3% to 6.44%, their lowest level since March. At 1.8 million, seriously delinquent loans, which are 90+ days late is dropping but is still 5x what it was in February.

Arizona’s delinquency rate is 5.4%, (National is 6.4%) there are 13 states with lower delinquency rates than AZ so we are almost in the top-performing quarter of the states.

Four.

Time is of the essence 14.5 business days (Christmas Eve is only half) Move quickly, get into forbearance if necessary. Do not panic sell, there are options.

Five.

Servicing timelines increased. Usually provide 24 hours and now 48 hours. Are things changing? We are watching.