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The number of borrowers in government Covid-19-related mortgage bailout programs is shrinking, but those in private-label or bank bailouts is rising.
This suggests that there is still pain ahead in the mortgage market, as some borrowers are simply not recovering enough financially to afford their home loans.
The total number of mortgages in active forbearance programs, where borrowers delay their monthly payments for at least three months, declined by 26,000 last week or 0.7%, according to Black Knight, a mortgage technology and data firm. This marks four consecutive weeks of improvement, but the pace has been slowing for the past few weeks.
As of Sept. 15, just under 3.7 million homeowners remain in these plans, representing 7% of all active mortgages. Together, these loans represent $781 billion in unpaid principal. The number of forbearance plans are now down more than 22% from the
After improving markedly in July, the number of borrowers struggling to make their monthly mortgage payments has essentially flatlined and now threatens to move higher.
As of Aug. 25, 3.9 million homeowners were in mortgage forbearance programs, according to Black Knight, a mortgage technology and analytics firm. This represents 7.4% of all active mortgages and is unchanged from the week before. The numbers have not improved in the past two weeks.
More concerning is that close to three-quarters of those in forbearance have had their terms extended from the initial three-month period. This suggests that their financial situations are not improving, and they are still unable to make their monthly payments. Another survey from the Mortgage Bankers Association also showed the rate of improvement slowing markedly.
“The extremely high rate of initial claims for unemployment insurance and high level of unemployment remain a concern, and are indications of the challenges