1.45M homeowners are seriously delinquent as foreclosure moratorium expires
Mortgage delinquencies are decreasing but they are still much higher than before the pandemic began. (iStock)
National mortgage delinquency rates fell by 5% in July to 4.14% — half the level they were in May — but about 1.45 million homeowners were still seriously delinquent on their mortgage payments, new data from Black Knight shows.
Delinquencies have improved in 12 of the last 14 months, and the two increases were related to the calendar month and how the dates fell, rather than worsening performance.
"While overall delinquency volumes continue to edge closer to pre-pandemic levels, the number of serious delinquencies were still significantly elevated as federal foreclosure moratoria expired at the end of July," Black Knight said in its report.
About 1.45 million borrowers remained at least 90 days delinquent at the end of July. These borrowers are in late-stage delinquencies but not yet in foreclosure and represent 1 million more than at the beginning of the pandemic, the data showed. However, many of these are currently in forbearance plans with their mortgage servicers.
If you are exiting forbearance and looking to ensure you don’t go into foreclosure, consider refinancing your mortgage to lower your monthly payments. Visit Credible to use a mortgage calculator and see how much you could save.
Delinquencies declined significantly in second quarter
Foreclosure starts remained low in July, the final month of the foreclosure moratorium on federally-backed mortgages, down 58% from the same time last year, Black Knight's report said. The number of loans in active foreclosure fell by 5,000 to yet another record low.
When looking at the second quarter of 2021 as a whole, data from the Mortgage Bankers Association (MBA) put the national mortgage delinquency rate at 5.47%, according to its National Delinquency Survey.
"Mortgage delinquencies across all loan types – conventional, FHA and VA – reached their lowest levels since the first quarter of 2020," said Marina Walsh, MBA vice president of industry analysis. "The drop in the delinquency rate for FHA loans and VA loans was the largest quarterly decline for both in the history of MBA’s survey dating back to 1979.
"Much of the second-quarter improvement can be traced to later-stage delinquent loans – those 90 days or past due, but not in foreclosure," Walsh said. "In fact, the 90-day delinquency rate dropped by 72 basis points, which is another record decline in the survey. It appears that borrowers in later stages of delinquency are recovering due to several factors, including improved employment and other economic conditions, the availability of home retention workout options after forbearance, and a strong housing market that is bringing additional alternatives to distressed homeowners."
One of those options brought on by a strong housing market includes a mortgage refinance, which helps homeowners meet their monthly mortgage payments by lowering the costs. With interest rates at all-time lows, homeowners could save significantly. Visit Credible to see how much you could save and get pre-qualified in minutes without affecting your credit score.
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How to avoid foreclosure
As Walsh pointed out, delinquencies are decreasing at significant rates due to the many options available to homeowners through government programs and a strong housing market. Here are some options available to homeowners to prevent foreclosures:
Forbearance: Homeowners struggling to make their monthly payments still have the option to enter COVID-19-related forbearance after the Biden administration extended the deadline to Sept. 30, 2021. This deadline applies to loans backed by the Department of Housing and Urban Development (HUD), Department of Veterans Affairs (VA) and Department of Agriculture (USDA). The Federal Housing Finance Agency (FHFA) provided similar relief for mortgages backed by Fannie Mae and Freddie Mac, and this option does not have a deadline.
Refinance: Homeowners also have the option to refinance their mortgage in today’s strong housing market. Even homeowners who missed payments and were in COVID-related forbearance could still have the opportunity to refinance their mortgage. By comparing multiple mortgage lenders at once, homeowners can find the best rates available to them. Visit an online marketplace like Credible to find the best option for you and save on your monthly payment.
Modification: If you can’t refinance your mortgage but are still struggling, a loan modification could change the terms of the loan. Contact your mortgage servicers to go over your options, such as reducing your interest rates or changing other loan terms.
If you are looking for options for your mortgage loan, contact Credible to speak to a home loan expert and get all of your questions answered.
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