1.2M Forbearances Over 1yr Old With 4mo of Relief Left. What Next?

Welcome to Sagent’s weekly homeowner hardship briefing where we analyze the latest MBA data to offer key takeaways for servicers.

Here’s what you need to know this week about the most recent MBA forbearance data (through May 23):

1. 1.2M Borrowers Are Now in Year 2 of Forbearance

This week’s data shows these trends maturing:

• Forbearances declining slightly
• Forbearance re-entries ticking up
• More borrowers with aging forbearances turning to loss mitigation

By aging forbearances, I mean forbearances where the borrowers have been in forbearance for at least a year.

The New York Fed recently noted that 1.2 million of the 2 million borrowers still in forbearance (as of March 2021) entered into forbearance in June 2020 or earlier.

That means 1.2M borrowers are in their second year of forbearance as of now.

And the clock on policy relief is running out.

2. There Are Only 4 Months Until Policy Relief Starts Expiring

With four months of policy relief left, and seven months until the foreclosure stay expires, servicers are on a tight timeline to solve for what’s next.

If you need a refresher, here’s a quick recap of the key policy date and developments over the last year:

• March 2020: CARES Act passes, providing 12 months of forbearance and a 60-day foreclosure moratorium
• June 2020: Forbearance population peaks at 8.85%, around 4.43M borrowers (see Figure 1)
• September 2020: First six months of forbearance expires, resulting in a significant drop of borrowers in forbearance
• February 2021: Biden Administration announces key changes, including allowing up to 18-months of forbearance, setting June 30, 2021 as the last day to request forbearances, and extending the foreclosure moratorium through June 30
• April 2021: CFPB proposes foreclosure ‘stay’ through December 31, 2021
• May 2021: Forbearance at 4.18% (2.1M borrowers)

 

 

And here are two big upcoming dates to keep an eye on:

• September 30, 2021: Marks the expiration of the 18-month limit on forbearance terms for borrowers who entered in March 2020
• December 31, 2021: Current foreclosure stay expires

The Bottom Line

The CFPB notes that up to 1.7 million borrowers may exit forbearance in September, and most of these borrowers may be at least a year behind on their mortgage payments by then (see Figure 2).

 

 

Over the next seven months, servicers will have to guide millions of homeowners out of forbearance and/or into loss mitigation plans, all under the CFPB’s “unprepared is unacceptable” guidance.

We can expect the CFPB and policymakers to offer more guidance and perhaps revised policy to avoid foreclosures if at all possible.

Sagent’s 3 core performing, non-performing, and consumer platforms have kept servicers in front of all policy and regulatory changes during this unprecedented era.

And we’ll keep doing the same during this summer’s critical 90-day check-ins ahead of September’s policy expirations (above).

We’re on standby to talk about how to help you care for borrowers during this critical phase.