The number of people entering new forbearance plans has risen to a three-month high, adding to a slight resurgence in activity after a long downward trend.

On a weekly basis, an increase in starts drove the number of active plans up by 19,000 or 2.3% to 835,000, according to Black Knight’s McDash Flash mortgage performance data. In comparison, pandemic-related payment suspensions rose by 36,000 or 4.6% the previous week.

“The four-week average for new start activity is now at its highest level since October,” Andy Walden, vice president of market research, wrote in a blog post, noting that, “This is a trend worth watching.”

The volume of mortgages in forbearance for different product types is numerically similar based on count, but the dollar amount is higher for those purchased by government-sponsored enterprises Fannie Mae and Freddie Mac, and the share involved remains somewhat elevated for private and government-insured loans.

The forbearance count and share were highest for mortgages backed by either the Federal Housing Administration or the Department of Veterans Affairs at 289,000, representing loans with an unpaid principal balance of $51 billion, or 2.4%. For private loans held in bank portfolios or securitized, the equivalent numbers were 272,000, $47 billion, or 2.1%. Fannie and Freddie-held mortgages in forbearance totaled 274,000, $55 billion, or 1%.

The number of people with suspended payments went up in all three categories during the most recent week. The count for FHA/VA and private loans was up by 9,000 in each category, representing a 9.6% increase for the former but just a 3.3% rise for the latter. The Fannie/Freddie loan count rose by 1,300 or just 50 basis points.

Private loans tend to have relatively higher forbearance rates in part because they were not afforded the same federal protections as government-related loans, and the FHA and VA programs were designed to serve borrowers with heightened affordability barriers to homeownership, so the individuals involved may have less of a financial buffer against hardship than others.

Although forbearance activity was up on a net basis for the most recent week, it’s still 6% lower than it was a month ago.

Because mid-month numbers usually reflect a period when exits are processed more slowly, departures could prove to be stronger in the next report.

More than 100,000 plans have been earmarked for month-end exits or renewals and more than one-third of them will expire in January.

While the significant drop in forbearance from the pandemic’s peak suggests many have recovered from related hardships, the recent uptick points to some new distress from variants or other causes.

Officials hope that other government measures like Ginnie Mae’s recent streamlining of certain modifications of FHA loans to more affordable terms, or state-distributed money from the federal Homeowner Assistance Fund will help those leaving forbearance with hardships. However, the types of housing assistance available varies by state and some jurisdictions like Illinois won’t be able to provide it until after January.

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