Tully has also kept an eye on the number of homeowners who have re-entered or extended indulgence. Re-entries account for a tiny percentage of forbearance activity, but extensions saw a sharp spike in late June and early July – the time when most of the initial 90-day deferral periods had expired.
It’s not that borrowers are in dire straits and need another 90 days to get back on their feet, says Tully Servicelast, which would result if all of their clients got out of forbearance at the same time in October.
“Maybe people really need it or feel entitled to it,” he says. “We’ll see in the coming weeks if people go from 180 to the full 360 they are entitled to under the CARES law.”
As Sagent’s man in DC, Tully had a front row seat on the traffic collapse that has captured Congress and is preventing the federal government from releasing another batch of COVID-19 aid. In addition to the usual questions about the size and scope of the next aid package, he asks another one: When will the COVID-19 emergency be declared over?
“At the end of March 2021, a year has passed since the CARES law was passed,” he says. “In theory, one could imagine a scenario where people would still beg their indulgence when someone didn’t raise a flag and say, ‘This is the end of the COVID crisis and we’re going back to normal.’ This is a kind of autopilot until someone finally declares that the crisis is over. “