USA TODAY International Edition
Delinquencies on mortgages surge by 1.6M last month
Delinquencies among borrowers for past- due mortgages are soaring, a sign that Americans are struggling to pay their bills amid a wave of layoffs and lost income from the coronavirus pandemic.
Mortgage delinquencies surged by 1.6 million in April, the largest singlemonth jump in history, according to a report from Black Knight, a mortgage technology and data provider.
The data includes both homeowners past due on mortgage payments who aren’t in forbearance, along with those in forbearance plans and who didn’t make a mortgage payment in April.
At 6.45%, the national delinquency rate nearly doubled from 3.06% in March, the largest single- month increase recorded, and nearly three times the previous record for a single month during the height of the financial crisis in late 2008, Black Knight said.
For context, it took more than 18 months before the first 1.6 million homeowners became delinquent during the Great Recession, said Andy Walden, economist and director of market research at Black Knight. There is still potential for a second wave of delinquencies in May, he added.
“The impact of COVID- 19 on the housing and mortgage markets has already been substantial,” Walden said. “It will be some months before we can gauge the full extent of that impact. Whatever the ultimate scope, it is almost certain the effects will resonate for many months to come.”
The Coronavirus Aid, Relief and Economic Security Act, passed in March, allows homeowners to suspend their mortgage payments for up to a year on federally backed mortgages.
It doesn’t protect mortgages that aren’t backed by the government, which make up about half of all mortgages in the USA.
About 3.6 million homeowners were past due on their mortgages at the end of April, the most since January 2015, as households face financial hardship. That included the roughly 211,000 borrowers who were in active foreclosure.
The coronavirus relief act prevented lenders from beginning foreclosure proceedings on federally backed loans for at least 60 days after March 18.
With foreclosure moratoriums in place in response to the outbreak, foreclosure starts and foreclosure sales, or completions, hit record lows.
Starts were down more than 80% from this time last year, while foreclosure sales saw a 93% decline over the same period.
“Forbearance plans, by their very nature, are intended to assist homeowners through times of crisis until they can get back on track financially, and historically, they have proven to be broadly successful in doing so,” Walden said.
“Given the sheer number of mortgage holders impacted, there remains a risk that some may progress into default and foreclosure further downstream.”
In the top 100 largest metropolitan areas, Miami ( 7.2%), Las Vegas ( 6.2%) and New York City ( 5.4%) topped the list for cities with the largest delinquency increases. Nevada was among the states with the biggest delinquency rates, climbing 5.2% to nearly 8%. New Jersey and New York followed, rising 5.1% and 4.9%, respectively.