Both CoreLogic and Black Knight have looked at the
million plus home loans that are still in forbearance as the majority of those
borrowers are quickly approaching the end of their eligibility. While their
analyses have taken different tacks, they agree that servicers will need to
work with borrowers to ease the exit from forbearance and prevent a wave of foreclosures.

CoreLogic says nearly three out of four of the
remaining 1.7 million loans it estimates remain in forbearance (this is 200,000
to 300,000 more than the estimates from Black Knight and the Mortgage Bankers
Association) will reach the maximum 18 month forbearance limit at the end of
September. The company categorizes its analysis on a comparison between loans that
are behind in their payments with those that, despite being in forbearance,
have not fallen into arrears.

That a number of homeowners apparently entered
forbearance as “insurance” was noted early in the pandemic, but this is the
first indication we have seen that this has continued to the present in
significant numbers. CoreLogic says that as of August 1, one half of GSE loans
in forbearance and two thirds of federally insured loans (FHA, VA, USDA) in the
program have missed payments, typically 12 of them.

Borrowers who
are behind on payments generally have much higher unpaid principal balances as
well as larger…

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