Number of missed mortgage payments soars in Valley

Forbearance program deadline Monday

Renters aren’t the only ones missing monthly payments and facing deadlines to keep their homes.

New data shows the number of metro Phoenix homeowners falling behind on mortgage payments is climbing fast.

A deadline to enroll in the federal forbearance program that allows many homeowners hurt by the novel coronavirus pandemic to delay mortgage payments is Aug. 31.

A foreclosure moratorium on homes with federally backed mortgages — about 70% of U.S. borrowers — was scheduled to end the same day. But on Thursday, Fannie Mae and Freddie Mac extended the foreclosure ban until Dec. 31.

The FHA and VA could follow the move.

Phoenix-area foreclosures are still near record lows due to the federal efforts, record low interest rates allowing homeowners to refinance and a strong housing market making it easier to sell fast.

But many housing experts will be closely watching how homeowners fare when the federal foreclosure protections go away.

“People have had a lot of options to avoid foreclosure in Phoenix,” said Tina Tamboer, senior housing analyst at the Cromford Report. “It’s not clear yet what

the expiration of federal help will mean for homeowners who can’t pay their mortgages now.”

More homeowners aren’t paying

What is clear right now is that more homeowners are struggling.

Arizona’s mortgage delinquency rate has more than doubled to 6% since the beginning of the year, according to the Mortgage Bankers Association’s second quarter report.

The rate is tracked through a national survey of mostly big lenders reporting the number of home loans that borrowers aren’t paying on. Not all mortgages in forbearance are counted as delinquent in the survey because lenders track them differently, so the delinquency rate could be higher.

“The COVID-19 pandemic’s effects on some homeowners’ ability to make their mortgage payments could not be more apparent,” said Marina Walsh, a vice president of industry analysis for the Mortgage Bankers.

The national delinquency rate is about 8.2%.

Mortgage delinquency rates in Arizona and the U.S. are at a nine-year high, according to the industry group.

Arizona’s delinquency rate on FHA loans is more than 12%, showing firsttime buyers are struggling more.

Also, more Arizona homeowners are struggling now than during the early months of the COVID-19 crisis, according to a weekly housing survey started by the Census in May.

About 27% of homeowners and renters in metro Phoenix say they missed their housing payments last month and don’t think they can pay next month, according to the latest Census Housing Pulse Survey.

The only time the Valley’s “housing uncertainty” rate was higher in the past 12 weeks was when it reached almost 28% in mid-August.

About162,500, or 7%, of Arizona’s 2.4 million homeowners with mortgages didn’t pay their lender last month, according to the Census.

Looming deadline

The requirement that lenders provide forbearance plans to borrowers with federally backed loans still is set to expire on Aug. 31. That includes Fannie Mae, Freddie Mac, FHA and VA mortgages.

Mortgage expert Dean Wegner with Scottsdale-based Guardian Mortgage is advising borrowers who need forbearance help after the deadline to still call their lender or loan servicer and ask for it.

He said forbearance terms might be different than the programs started under the CARES Act in March and require more documentation, but most lenders can still provide some type of “payment relief.”

Despite the jump in the number of people who aren’t making their mortgage payments, foreclosures in metro Phoenix remain near record lows. Last month, 30 Valley homeowners lost houses to foreclosure, according to The Information Market. That compares with almost 4,000 in July 2011, during the last recession.

Of course, the number of people losing homes is artificially low due to the foreclosure moratorium and forbearance programs.

Still, Valley foreclosures aren’t expected to climb significantly in September because the process for lenders to take back homes in Arizona typically takes three months.

Tamboer doesn’t think foreclosures will soar in metro Phoenix this year because homeowners have options.

“Homeowners aren’t going to walk away like they did during the housing crash. Most have too much equity to even think about doing that,” she said. “Even most people who bought houses in the Valley last year have equity now.

“Valley homeowners shouldn’t panic,” she said