Abstinence plans are reduced at the end of June



Patient homeowners decline slightly, showing slow improvement last few weeks as the industry expects to see over 200,000 additional reviews in the last days of June.

During the weekly period ending June 29, approximately 146,000 Covid abstinence plans were reviewed for removal or renewal. Of these, 44,000 were dropped from their plans and 102,000 were renewed, according to Black Knight.

“Overall, we ended up with a net cut of 6,000 plans,” said Andy Walden, Black Knight economist and vice president of marketing research, in a written statement. “Not overwhelming, but it really sets us up for what could be a bigger improvement next week as some 218,000 plans still had to be reviewed by Wednesday, June 30th.”

The provisions Care law allowed borrowers to receive COVID benefits for up to 18 months. Many of those who enrolled in these programs in their early weeks were offered a final quarterly check in June before their plans expire later this year.

A total of 2.051 million plans remained on hold, compared to 2.057 million a week earlier, accounting for 3.9% of total mortgage loans. The current figure is 145,000 less than a month ago, that is, by 6.6%. The rate of improvement was accelerated over the previous two weeks, when abstinence rates were down 6% and 5.4%.

The weekly improvement in abstinence conditions occurred for both GSE-supported and government-funded loan types. Mortgages sponsored by Fannie Mae and Freddie Mac lost the most plans – 5,000, down to 626,000 from 631,000 a week earlier. Bad loans secured by the Federal Housing Administration or the Department of Veterans Affairs fell from 829,000 to 827,000.

But the rise in forward portfolio and securitized private label loans has offset these improvements. Portfolio loans and PLS loans that were not protected by CARES increased by 1,000 over the previous week to 598,000 from 597,000.

The outstanding balance of deferred loans was $ 401 billion, up from $ 403 billion a week earlier. Of that amount, $ 130 billion was backed by Fannie Mae or Freddie Mac, $ 141 billion in government-sponsored mortgages and $ 131 billion in portfolio loans or PLS loans.

The drop in new openings – 9% less in the past four weeks than in the previous four-week period – was also welcome news, Walden said, even though the Mortgage Bankers’ Association found in its data that refraining from re-entry rose.

The increase in re-entry reported by the MBA could indicate signs of persistent underemployment or income volatility among homeowners since the start of the pandemic. But Job data for June released Friday by the US Bureau of Labor and Statistics shows promising developments on this front that could be corroborated in tolerance reports this summer.

“Fewer workers reported working part-time for economic reasons, suggesting they could now have a full-time job,” said Mike Fratantoni, MBA senior vice president and chief economist. “And the number of workers reported as ‘laid off’ increased, in line with the higher quit rates seen in other data.”


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