Servicers Face Operational Challenge of Processing Up To 18,000 Forbearance Plans Per Day as Newly Detailed Forbearance Timelines Frontload Expirations to the Fall

  • As of July 20, of the 7.3 million homeowners who have been in COVID-19-related forbearance at some point since the onset of the pandemic, approximately 1.86 million remain in active plans
  • Recently, FHFA, FHA, VA and USDA have provided clarifying details on varying maximum allowable forbearance periods depending on when a plan was initially requested, with each agency’s matrix differing from the others
  • As a result, forbearance plans started as much as seven months apart would now expire simultaneously, assuming borrowers stayed in for the maximum allowable term
  • This would concentrate expiration activity later this year, particularly among FHA borrowers who may face heightened challenges in returning to making mortgage payments post-forbearance
  • Under the current expiration matrices, 65% of all plans – including nearly 80% of all FHA and VA loans now in forbearance – would expire through the remainder of 2021, approximately 1.2 million in total
  • With the bulk of expirations now coming earlier than anticipated, servicers face mounting operational challenges related to such a large volume of complex, post-forbearance loss mitigation efforts

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