By Sabrina Karl
For the first time since the COVID-19 pandemic began, the number of U.S. mortgage holders in forbearance has declined.
According to Black Knight’s weekly report released Friday, 8.9% of U.S. mortgages were in forbearance as of June 4. That’s down from the pandemic high of 9.0% seen in the previous two weeks.
“After rising sharply in April and then leveling off toward the end of May, the number of American homeowners in forbearance plans has now decreased for the first time since the crisis began,” said Black Knight CEO Anthony Jabbour.
Last week’s reading represents 4.73 million homeowners currently in forbearance out of approximately 53 million mortgages held nationwide.
Forbearance is an agreement between a homeowner facing financial hardship and their mortgage lender allowing monthly payments to be reduced or paused for some agreed upon period. A plan for later repayment is established, and the lender cannot foreclose during forbearance.
Although forbearance is not a new practice, more Americans were granted eligibility to request it when the CARES Act passed in late March mandated that those with government-backed loans who were economically impacted by COVID-19 be provided with the option to suspend mortgage payments for up to 12 months.
Requests quickly skyrocketed, with the share of U.S. mortgages in forbearance climbing quickly and steadily from 5.5% on April 17 to 8.8% on May 15. Only recently has it flattened out with two 9.0% readings in late May before finally dipping last week.
The share of mortgages in forbearance varies considerably among mortgage types, with 7.1% of Fannie Mae and Freddie Mac in forbearance compared to 12% of home loans backed by the Federal Housing Administration and the Veterans Administration.
Private-market mortgages, which are not government-backed, round out the industry, with 9.6% of those mortgages currently in forbearance.