Homeowners exit forbearance amid rebound
Hundreds of thousands of homeowners nationwide are exiting forbearance as the economy improves, according to several surveys that track mortgage performance. The development signals that the strategy of staving off foreclosures by offering the option to pause or reduce mortgage payments is working for many.
“The accelerating economic recovery in March helped more homeowners recover and become current on their mortgages, in addition to helping other homeowners with more stable financial situations exit forbearance,” Mike Fratantoni, chief economist for the Mortgage Bankers Association, said in a statement.
Black Knight, which tracks mortgage data, estimated the number of mortgages in forbearance dropped by 323,000 over the past month — a 12.3 percent reduction. As of April 6, 2.3 million homeowners remain in forbearance, down from 4.75 million at its peak during the pandemic.
The Mortgage Bankers Association’s weekly survey showed that homeowners who have exited forbearance by reaching agreements with their lenders to lessen their financial burdens — by either deferring payments, modifying loan terms or entering repayment plans — have been largely successful at making subsequent monthly payments. More than 88 percent of homeowners who entered such agreements were current on their loans at the end of March, compared with 92 percent of all homeowners.
Frank Nothaft, chief economist for real estate data company CoreLogic, also noted in a statement that the rate at which homeowners fall behind on their mortgages has fallen to its lowest point in 12 months, a “hopeful sign that family finances are beginning to improve.”
“While delinquency rates are higher than we would like to see, they continue to decline,” he said. “This is a good sign, and considering the improving picture regarding the pandemic and climbing employment rates, we are looking at the potential for a strong year of recovery.”