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Nearly 3 million borrowers are already in forbearance

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DISCLAIMER: As the COVID-19 public health situation evolves, new regulations are being continually issued. This page/story/information may not include the most recent information.

GSE loans in forbearance now exceed FHFA Director Calabria’s projectionApril 17, 2020, 12:47 pm By Ben Lane

It appears the forbearance issue is already much more significant than federal decision-makers thought it would be.

Federal Housing Finance Agency Director Mark Calabria told HousingWire last week that his expectation was that approximately 1 million GSE mortgages will be in forbearance by May, but new data from Black Knight shows that the number of GSE mortgages in forbearance already far exceeds Calabria’s projection.

According to Black Knight, nearly 1.4 million borrowers whose mortgages are backed by Fannie Mae and Freddie Mac are already in forbearance.

To ascertain this data, Black Knight reviewed a sample set of loans that represent the majority of the mortgage market and extrapolated that data across the entire mortgage landscape.

Black Knight’s data shows that overall, more than 2.9 million mortgages are in forbearance as of April 16. That figure represents 5.5% of all active mortgages.

Image courtesy of Black Knight. Click to enlarge

In total, those loans represent $651 billion in unpaid principal balance.

The figure also shows just how quickly the number of borrowers needing forbearance is growing.

Data released earlier this week by the Mortgage Bankers Association showed that 3.74% of all borrowers were in forbearance as of April 5.

Image courtesy of Black Knight. Click to enlarge

The data from Black Knight also shows that forbearance is more prevalent among loans backed by the Federal Housing Administration and the Department of Veterans Affairs.

According to Black Knight, 7.6% of the loans backed by the FHA and VA are currently in forbearance. Put another way, approximately 922,000 of the 12.1 million FHA and VA loans are in forbearance.

But the forbearance situation isn’t limited to GSE or government-backed loans.

According to Black Knight, nearly 5% of loans held either in portfolio or privately securitized are also in forbearance.

The issue of growing forbearance demonstrates the need for a solution for mortgage servicers that are required to advance principal and interest payments to investors on loans that are in forbearance.

Over the last

DISCLAIMER: As the COVID-19 public health situation evolves, new regulations are being continually issued. This page/story/information may not include the most recent information.

GSE loans in forbearance now exceed FHFA Director Calabria’s projectionApril 17, 2020, 12:47 pm By Ben Lane

It appears the forbearance issue is already much more significant than federal decision-makers thought it would be.

Federal Housing Finance Agency Director Mark Calabria told HousingWire last week that his expectation was that approximately 1 million GSE mortgages will be in forbearance by May, but new data from Black Knight shows that the number of GSE mortgages in forbearance already far exceeds Calabria’s projection.

According to Black Knight, nearly 1.4 million borrowers whose mortgages are backed by Fannie Mae and Freddie Mac are already in forbearance.

To ascertain this data, Black Knight reviewed a sample set of loans that represent the majority of the mortgage market and extrapolated that data across the entire mortgage landscape.

Black Knight’s data shows that overall, more than 2.9 million mortgages are in forbearance as of April 16. That figure represents 5.5% of all active mortgages.

Image courtesy of Black Knight. Click to enlarge

In total, those loans represent $651 billion in unpaid principal balance.

The figure also shows just how quickly the number of borrowers needing forbearance is growing.

Data released earlier this week by the Mortgage Bankers Association showed that 3.74% of all borrowers were in forbearance as of April 5.

Image courtesy of Black Knight. Click to enlarge

The data from Black Knight also shows that forbearance is more prevalent among loans backed by the Federal Housing Administration and the Department of Veterans Affairs.

According to Black Knight, 7.6% of the loans backed by the FHA and VA are currently in forbearance. Put another way, approximately 922,000 of the 12.1 million FHA and VA loans are in forbearance.

But the forbearance situation isn’t limited to GSE or government-backed loans.

According to Black Knight, nearly 5% of loans held either in portfolio or privately securitized are also in forbearance.

The issue of growing forbearance demonstrates the need for a solution for mortgage servicers that are required to advance principal and interest payments to investors on loans that are in forbearance.

Over the last few weeks, parties from all sides have called on the government to set up a forbearance liquidity facility for mortgage servicers.

Black Knight’s data highlights just how big of a problem that already is.

According to the report, at the current forbearance rate, mortgage servicers would need to advance $1.5 billion per month to holders of GSE-backed mortgage securities.

Beyond that, servicers on portfolio or privately-backed mortgages would need to advance another $1.1 billion per month.

Image courtesy of Black Knight. Click to enlarge

And while there is a program in place to aid servicers on FHA and VA mortgages, there is no such facility set up for GSE or private mortgages, despite the growing requests for one.

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Michigan license number:   DM-0016282 Available to the public and licensed in Michigan.

Section 13(1)  When a licensee establishes a debt management plan for a debtor, the licensee may charge and receive an initial fee of $50.00

Section 13(2)  A licensee shall attempt to obtain consent to participate in a debt management plan from at least 51%, in number or dollar amount, of the debtor’s creditors within 90 days after establishing the debt management plan. If the required consent is not actually received by the licensee, the licensee shall provide notice to the debtor of the lack of required consent and the debtor may, at its option, close the account. If the debtor decides to close the account, any unexpended funds shall be returned to the debtor or disbursed as directed by the debtor.

Sec. 14. (1) A contract between a licensee and debtor shall include all of the following:

(a) Each creditor to which payments will be made and the amount owed each creditor. A licensee may rely on records of the debtor and other information available to it to determine the amount owed to a creditor.

(b) The total amount of the licensee’s charges.

(c) The beginning and termination dates of the contract.

(d) The principal amount and approximate interest charges of the debtor’s obligations to be paid under the debt management plan.

(e) The name and address of the licensee and of the debtor.

(f) Any other provisions or disclosures that the director determines are necessary for the protection of the debtor and the proper conduct of business by a licensee.

Sec. 18. (1) In addition to the fee described in section 13(1), a licensee may charge a reasonable fee for providing debt management services under a debt management plan. The fee under this subsection shall not exceed 15% of the amount of the debt to be liquidated during the express term of the plan.

(2) A licensee may offer a debtor the option to purchase credit reports or educational materials and products, and charge a fee to the debtor if the debtor elects to purchase any of those items from the licensee.  Fees charged under this subsection are not subject to the 15% limitation on fees described in subsection (1).

(3) Except for a cancellation described in subsection (4), in the event of cancellation of or default in the performance of the contract by the debtor before its successful completion, a licensee may collect $25.00 in addition to any fees and charges of the licensee previously received by the licensee. This $25.00 fee is not subject to the 15% limitation on fees and charges under subsection (1).

(4) A contract is in effect when it is signed by the licensee and the debtor and the debtor has made a payment of any amount to the licensee. The debtor has the right to cancel the contract until 12 midnight of the third business day after the first day the contract is in effect by delivering written notice of cancellation to the licensee. A cancellation described in this section is not subject to, and a licensee shall not collect, the fee described in subsection (3).

(5) If a debtor fails to make a payment of any amount to a licensee within 60 days after the date a payment is due under a contract, the licensee may, in its discretion, cancel the debt management contract if it determines that the plan is no longer suitable for the debtor, the debtor fails to affirmatively communicate to the licensee the debtor’s desire to continue the plan, or the creditors of the debtor refuse to continue accepting payments under the plan.

(6) A licensee shall not contract for, receive, or charge a debtor an amount greater than authorized by this act. A person that violates this subsection, except as the result of an inadvertent clerical or computer error, shall return to the debtor the amount of the payments received from or on behalf of the debtor and not distributed to creditors, and, as a penalty, an amount equal to the amount overcharged.

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