Forbearance loans continue to decline steadily.

New data was required to assess the COVID-19 pandemic’s impact on the US housing market, given the rapid and widespread adoption of mortgage forbearance in reaction to the epidemic. Several data sources answered this demand by providing timely mortgage payment information, which has helped monitor how families are coping with the epidemic.

According to mortgage statistics, some borrowers are having difficulty getting back on their feet. Data vendors responded swiftly to offer real-time forbearance and delinquency information. According to Black Knight data, forbearance and delinquency rates decreased from March to January this year. The rates of patience and failure have reached a halt in this graph.

Rates of forbearance peaked at nine percent in late May last year before gradually declining to about five percent by the end of January. This drop indicates that families’ overall financial situation has improved and that forbearance helped many households throughout the crisis.

National delinquency rates reached around eight percent in May of last year, then fell to about six percent by the end of January. The significant decreases in debts moving from

current to newly overdue since the summer may be ascribed to this reduction. In December last year, the number of loans that were thirty and sixty days past due were both lower than they were in December two years ago. Although the number of early-day delinquencies has been declining, the increasing number of significant failures since the pandemic has significantly restricted the decrease in the total national delinquency rate.

According to an MBA Survey, the total number of loans under forbearance has dropped significantly, with about two million homeowners, according to MBA, are on forbearance programs. Fannie Mae and Freddie Mac’s share of forbearance loans fell three basis points to about two percent. The forbearance share for portfolio loans fell one basis point to about eight percent, while Ginnie Mae loans fell two basis points to about five percent. Independent mortgage bank servicers’ percentage of loans in forbearance fell two basis points to about four percent. In comparison, depository servicers’ rate of loans in forbearance fell two basis points to a little more than four percent.

The share of loans in forbearance declined for weeks unending, with slight declines across almost every loan category. The rate of forbearance exits slowed, but the pace of new forbearance requests remained at a superficial level of four basis points. The continuous rise in aggregate forbearance figures is encouraging since better economic circumstances enable more homeowners to reclaim their homes. However, we continue to keep a careful eye on the number of forbearance re-entries, representing borrowers who left forbearance but were forced to re-enter due to difficulties. This week, re-entries accounted for about six percent of forbearance loans.

As the epidemic continues to affect people’s lives and livelihoods, policymakers and practitioners must keep an eye on individuals who exit forbearance after the time has expired, as well as tenants who are unable to pay their rent. Homeowners who stay in forbearance for a more extended period are likely to be in worse financial shape than those who left sooner, necessitating more assistance to restart their mortgage payments. However, safeguards like the loss mitigation waterfall and the home equity buffer are intended to prevent even the most at-risk forbearance homeowners from foreclosure.

We need more data in the rental sector to properly assess individuals behind their rent payments and how much assistance is required. Renters are confused because estimates of total back rentals due by tenants vary considerably per institution. It’s uncertain if the funds in extra rental aid announced by the Biden administration would help renters, who have been affected worse by the epidemic than homeowners. Policymakers can support homeowners and landlords throughout the epidemic by analyzing new and current housing data.