In this 18 minute video, Lydia Wietsma and I discuss the latest in forbearance, extensions, tax liens, and servicing.
For 15 straight weeks, the forbearance numbers have been decreasing. There are now about 2 million loans in forbearance or about 4.04% of all mortgages, nationwide.
Forbearance by Stage:
- 10.6% of borrowers are in the initial stage of forbearance and new requests dropped down to their lowest level since March 2020.
- 83.6% of borrowers are on extension, down from previous weeks. Well over 50% of borrowers on extension have been in forbearance for over 12 months. More and more borrowers are reaching the 15-month mark for their plans and are required to exit forbearance. It is expected that there will be about 700,000 exits this month alone.
- 5.8% of borrowers are re-entries, up from previous weeks.
Forbearance Exits from June 1, 2020 through June 6, 2021:
45.7% of borrowers continued making their payments, got caught up upon exit, or paid off the loan with a refinance or sale upon exit. This number continues to decline slightly each week.
15.3% of borrowers exited their plan, still behind on their payments and without a loss mitigation plan in place. This number has been increasing.
The FHFA extended forbearance for multifamily rental properties only. The extension is through the end of September. For a landlord to extend forbearance they are required to extend the tenant protections meaning they cannot evict a tenant solely for lack or payment among other things. The eviction ban is set to expire on June 30. Many industry groups, including NAR and the MBA, have asked the CDC to allow the ban to expire.
For any other property type, the window to enter forbearance is closing. June 30th is the last day to get started on a plan.
Finance watchdog, the CFPB is looking to make examples out of lenders and servicers for crossing any lines. They are particularly looking at how forbearance plans are handled. With the administration change, so did the CFPB leadership. The organization did not police as much from 2018-2020 having only fined companies about $800 million. A much smaller number than the $12 billion in fines distributed from 2012-2018. The new leadership stated, “They’re looking to pin some heads on the wall, to show that there’s a new cop on the beat. They want to make examples.”
Equity & Debt:
We had talked a lot about the increasing equity environment we are currently in. When you combine that and the responsible lending of the past 10 years it is no surprise that mortgage debt has been kept in check. This chart shows that we do not have a lot of mortgage debt growth since the market crashed 13 years ago but equity certainly has increased.
Tax Lien letters are going out from the servicers. This is likely only for properties without a mortgage as most mortgage companies make the tax payments as well. Tax lien foreclosures have also been restricted by the foreclosure moratorium. It may be the iBuyers who have hired the servicing company to distribute the letters and do additional inspections. While we do not know all of the details, we do not know that multiple iBuyers are working with servicing companies for inspections. It is easy to suspect that there is more at play here as well.
There are two weeks left before the end of the forbearance window and the eviction and foreclosure moratoriums are lifted. Based on her interactions with the servicer she works with, Lydia does not believe that they are expecting another extension. They are prepping to move forward come July 1.
Sarah Perkins is an award winning account executive and has been in title sales since 2004. As the Director of Industry Research & Senior Account Executive, Sarah’s role is to bring real estate transactions to Navi Title. Sarah supports her clients by helping them navigate the ever-changing real estate space through thorough research and understanding of current trends impacting today’s home buyers and sellers.