AZ Forbearance Update 2/17/2021

In this 16 minute video, Lydia Wiestma and I discuss the latest in forbearance, delinquencies, extensions, and inventory.

We do these videos to share the real information with real estate professionals and consumers about what is going on in this sector of real estate. There is a lot of fear behind forbearance and the moratoriums, and bad advice being given. While there is no reason to panic, it is important to be informed.

CFPB & Servicers:

As we discussed recently, the CFPB is breathing down the necks of the loan servicers and they know in order not to be fined, they have to follow all of the rules by the book. That is a good thing for struggling borrowers. The days of the lax info on forbearance from the servicers are numbered. The one piece of advice I would give any borrower when they call their servicer, get everything discussed in writing. Track and document EVERYTHING.

Forbearance Numbers:

The latest forbearance numbers show improvement. The total number of loans in a forbearance program is around 5.29% or about 2.6 million, a decrease of about 100,000 in the last 2 weeks.

Mike Fratantoni with the Mortgage Bankers Association said, “2.6 million homeowners remain in forbearance plans. MBA expects the rollout of the vaccines to boost economic growth through the course of the year, leading to a stronger job market and a greater ability for more struggling homeowners to get back on their feet. We do believe that additional support is needed until they have regained their jobs and incomes.”

Forbearance by Stage:

• The initial stage decreased to 16.07%
• Extensions increased to 81.42%
• Re-entries decreased to 2.52%

Forbearance Exits from June 1, 2020 – February 7, 2021:

• 43.6% of forbearance exits are paid up and current.
• The number to watch remains at 13.8% of forbearance exits are doing so without a loss mitigation plan in place.
• This means that if all 2.6 million borrowers exited their forbearance plan today, about 348,000 would leave with no plan in place.

Delinquencies:

In Q4 2020 the mortgage delinquency rate, which includes those in forbearance who are behind, was 6.73%, a 0.92% decrease from Q3 2020 but still nearly 3% above this time last year. This nearly 1% quarterly drop is the biggest decrease since the Mortgage Bankers Association started tracking this data in 1979.

The 30 day lates reached their lowest since tracking began in 1979, while both 60 and 90 days lates also decreased. 90+ day lates remain the largest delinquent group at just above 5% of all mortgages.

Total mortgage delinquencies across the three loan types – conventional, FHA, and VA – and across the major stages of delinquency – 30-day, 60-day, and 90-day – declined from last year’s third quarter.

Timeline Changes:

The foreclosure, forbearance, and eviction moratorium have all been extended through June 30, 2021

• Extend the foreclosure moratorium for homeowners through June 30, 2021
• Extend the mortgage payment forbearance enrollment window until June 30, 2021, for borrowers who wish to request forbearance
• Provide up to six months of additional mortgage payment forbearance, in three-month increments, for borrowers who entered forbearance on or before June 30, 2020.

Final Thoughts:

The longer they push the can down the road, the less equity these homeowners will have to work with. The one saving grace for them is the huge amount of appreciation we are currently experiencing. With inventory levels where they are today, many expect prices to continue to increase at rapid levels.