AZ Forbearance Update 1/13/2021

In this 10 minute video Lydia Wietsma and I discuss the latest developments in forbearance trends and numbers.

We do these videos to share the information with real estate professionals and struggling borrowers. People have options. There is no need to panic sell.

The Numbers:

Last week the total number of loans now in forbearance decreased from 5.53% to 5.46% or about 2.7 million homeowners are in forbearance plans.

By stage: 18.49% of loans in forbearance are in their initial stage. Up slightly from 18.27%. 79.85% are in extension, up from 79.61%. The remaining 1.66% are forbearance plan re-entries, down from 2.11% last week.

Of the cumulative forbearance exits for the period from June 1 through December 27, 2020 about 45% are current and 13.2% left with no loss mitigation plan in place. The others either sold, deed in lieu, loan modification, etc. It is the 13.2% of borrowers that are the ones who need extra guidance.

“Surging COVID-19 cases caused economic activity to stall in December, with a monthly job loss for the first time since April, and with those jobs mostly concentrated in the leisure and hospitality sector. We expect that this slowdown will prevent any rapid improvement in the forbearance numbers over the next few months.”

Mike Fratantoni, MBA’s Senior Vice President and Chief Economist

One thing to note is that most forbearance exits happen at the beginning of the month and entries at the end of the month. As the size of the overall change diminishes, we will see the numbers decrease at the beginning of the month and either stay flat or increase at the end of the month.

Equity & Inventory:

Year over year inventory has dropped by nearly 51% while contracts are up nearly 26%. Monthly median appreciation is 16%. And closings are up 26% year over year. We have 0.7 months of inventory. The supply imbalance is pushing prices up quickly.

With equity increasing , struggling homeowners have more and more options.