Forbearance Exits Mount, But Foreclosure Activity Remains Muted

Mortgage delinquencies slowly and steadily continue to improve as foreclosure remains muted, even as forbearance exits mount, according to new report from Black Knight.

The national delinquency trend continues its downward slide, falling another 4.25% to 3.74% at the end of October. A total of 82,000 loans were removed from the initial stages of forbearance (30 days or more due on payments), bringing the total number of such loans below 2 million for the first time since the run-up early on in the pandemic.

Serious delinquencies (those 90 or more days past due) saw a greater than 10% decline (-127,000) as the first wave of forbearance entrants reached the end of their terms and returned to making payments. The majority of plan exits in recent weeks are still working through mitigation options with their servicers, so further improvements in serious delinquencies are expected in the coming months. 

Despite nearly 700,000 more seriously delinquent mortgages (including those in active forbearance plans) than prior to the pandemic, foreclosure activity remains extremely muted. Foreclosure starts edged up by a modest 2.6% in October, as servicers continued to work through loss mitigations with homeowners still struggling to make mortgage payments. 

The 4000 foreclosure starts seen in October are more than 90% below 2019 levels and, despite a rise of 3,000 for the month, active foreclosure inventory remains near an all-time low.