April saw a record for mortgage nonpayment
The number of loans in forbearance also increased this week
Record unemployment caused by the coronavirus pandemic led to the largest one-month increase in mortgage delinquencies ever recorded. The number of borrowers who stopped paying their home loans spiked by 1.6 million last month, according to Black Knight, a real estate data and analytics company.
Not even during the Great Recession did delinquencies rise this fast.
The national delinquency rate soared to 6.45% in April, up from 3.06% in March and three times the previous single-month record set in 2008. The 3.6 million homeowners who are past due on their mortgages is the most since 2015.
The data includes homeowners who didn’t make a mortgage payment in April, including those who are in forbearance plans.
The states that had the biggest increases in delinquent mortgages include: Nevada (5.2% increase), New Jersey (5.1%) and New York (4.9%). Miami (7.2%), Las Vegas (6.2%) and New York City (5.4%) topped the metropolitan areas.
The number of loans in forbearance increased this week as well. A survey of lenders by the Mortgage Bankers Association found 4.1 million homeowners had requested a forbearance plan, or 8.16% of loans. By comparison, less than 1% of loans were in forbearance in early March. When a loan goes into forbearance, payments are reduced or postponed.
“The pace of forbearance requests continued to slow in the second week of May, but the share of loans in forbearance increased,” Mike Fratantoni, MBA’s chief economist, said in a statement. “There has been a pronounced flattening in loans put into forbearance — despite April’s uniformly negative economic data, remarkably high unemployment, and it now being past May payment due dates.”
Under the Cares Act, homeowners can suspend their mortgage payments if they have a federally backed mortgage.