The latest Mortgage Monitor Report from Black Knight Inc.’s Data & Analytics division suggests that as the final expiration date for many forbearance plans approaches at the end of March, servicers may find seriously delinquent homeowners facing new challenges.

“The various moratoriums which have kept foreclosure actions at bay over the past 10 months may be lulling us into a false sense of security about the scope of the post-forbearance problem we will need to confront come the end of March,” says Ben Graboske, president of Black Knight Data & Analytics.

“Last year saw the largest number of homeowners – nearly 3.6 million – become 90 or more days past due since 2009, and as of the end of December, 2.1 million remained so,” he notes. “When nearly a quarter of all forbearance plans come to an end on March 31, at the current rate of improvement, there would still be approximately 1.5 million more such serious delinquencies than before the pandemic.”

According to Black Knight, current trends suggest more than 2.5 million homeowners would still in forbearance at the end of Q1. In recent weeks, only about 12% of homeowners in forbearance continued to make their monthly mortgage payments, whereas that number was almost 50% early in the pandemic.

Graboske says this fact could mean that “people who are taking the full forbearance period afforded to them may well be experiencing prolonged financial distress, and face extended challenges as they return to making payments.” In turn, there is an “industry-wide need for post-forbearance waterfalls to determine borrower need and readiness while foreclosure moratoriums are still in place.”

For more details, access the Mortgage Monitor Report.

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