While the number of borrowers in government and private sector Covid mortgage rescue programs is declining fast, it is still possible for those who are still in financial trouble to make a difference.
Due to the recent rise in home prices, borrowers are now in far better financial standing than at the beginning of the pandemic.
According to a Black Knight report, the number of mortgage forbearance programs in which borrowers were permitted to defer their monthly payments fell by more that 5% over the week before, an analytics and data firm.
August expirations were the main reason for the drop. The programs allowed borrowers up to 18 months forbearance after they were entered. Expirations are now rolling. Because the number of borrowers who enrolled was higher in March and April 2020, September will likely see a large group of 400,000 expirations.
There are still approximately 1.618million borrowers who are in forbearance programs. This is down from 5 million at May 2020's peak, which was 3.1% of all outstanding mortgages. It amounts to $313 billion in unpaid balance. 98% of troubled borrowers have at least 10% equity in the homes they own, excluding missed payments. 93% of those borrowers still have more equity than 10%, even after taking out missed payments. The majority of homeowners could sell their homes and still make a profit in today's tight housing market.
"These strong equity positions should help reduce the volume of distressed input into the real estate industry as well as provide strong incentives for homeowners to make mortgage payments again even if they need to be reduced by modification," stated Ben Graboske (president of data and analytics at Black Knight).
