• According to the Black Knight McDash Flash Forbearance Tracker, as of April 23, 2020, more than 3.4 million homeowners – or 6.4% of all mortgages – have entered into COVID-19 mortgage forbearance plans
• This population represents $754 billion in unpaid principal and includes 5.6% of all GSE-backed loans and 8.9% of all FHA/VA loans
• At today’s level, mortgage servicers are bound to advance $2.8 billion of principal and interest payments per month to holders of government-backed securities on COVID-19-related forbearances
• Another $1.3 billion per month in lost funds is faced by those with portfolio-held or privately-securitized mortgages
• Ginnie Mae had announced a pass through assistance program through which it will advance principal and interest payments to investors on behalf of servicers and FHFA very recently announced that P&I advance payments will be capped at four months for servicers of GSE-backed mortgages.
• Given FHFA’s recently announced four-month limit on advance obligations, servicers of GSE-backed mortgages could still face more than $7 billion in advances based on the number of forbearance plans thus far
• Regardless of a borrower’s forbearance status, servicers of loans in government-backed securities must make advance principal and interest (P&I) payments each month for these loans. 

Forbearance Totals

Estimated Monthly Advances

For now, advances from GSE servicers will cover forbearances.

But only for 4 months and it will not cover any losses from those advances.

Servicers of lenders of non-GSE loans have additional issues.

Mish