Mortgage forbearance is once again trending upward after largely declining through most of June, according to the mortgage tracking company Black Knight (NYSE:BKI).

Active forbearance plans, when homeowners delay their monthly mortgage payment, rose 79,000 from last week.

Total forbearance plans reached 4.68 million as of June 23, according to Black Knight, amounting to 8.8% of all active mortgages. Collectively, these plans equal more than $1 trillion in unpaid principal on home loans.

Mortgages in forbearance have hit all parts of the industry, with 6.9% of government-sponsored entities in forbearance, 12.5% of Federal Housing Administration and Veteran Affairs loans, and 9.6% of mortgages in private-label securities or bank portfolios.

Active Forbearance Plans

Image source: Black Knight.

Due to the amount of forbearance, Black Knight estimates that mortgage servicers may need to front investors holding mortgage-backed securities guaranteed by the government as much as $3.5 billion per month.

The increase in forbearance shows that a new surge in coronavirus cases may be affecting homeowners' ability to make payments, and that many Americans are still on fragile financial footing.

It's also not a great sign for the mortgage industry, which faced a liquidity crunch at the end of March.

Even while many homeowners go into forbearance, many mortgage servicers are still on the hook for payments they owe to investors holding mortgage-backed securities. 

Holders of mortgage-backed securities are paid out through the cash flows from thousands of mortgages packaged together. While many are guaranteed by the government, they are still based on the ability of homeowners to make mortgage payments.

Part of what led to the housing crisis in 2008 was when too many of the homeowners behind the mortgages in mortgage-backed securities defaulted on their loans.

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