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Black Knight Reports Record Single-Month Surge in Mortgage Delinquencies

[Updated: Jul 27, 2020 ] May 21, 2020 by Marc Rapport
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The mortgage delinquency rate among U.S. homeowners has just seen its largest single-month increase in history, according to Black Knight (NYSE: BKI).

The April delinquency rate of 6.45% was more than twice that of March and nearly three times the largest single-month surge previously recorded in late 2008 as the Great Recession was taking hold.

In its statement on Thursday, May 21, the Jacksonville, Florida-based real estate analytics firm said an estimated 3.6 million homeowners were past due on their mortgages on April 30, (including roughly 211,000 in active foreclosure), the most since January 2015.

"That's an increase of 1.6 million since March, also the largest single-month jump on record," the company said. "This number includes both homeowners past due on mortgage payments who are not in forbearance as well as those in forbearance plans and who did not make an April mortgage payment."

The highest rate by state was recorded in Nevada, which jumped more than 5 percentage points in a month to a nearly 8% delinquency rate, Black Knight said. That follows a report from another real estate analytics firm, CoreLogic (NYSE: CLGX), that not one state had recorded an increase in delinquency rates in February for the fifth straight month.

Record lows to record highs

The surge came after a long run of record low delinquencies. CoreLogic reported earlier this month that delinquency rates in February had dropped for the 26th straight month nationally.

CoreLogic also said that the foreclosure rate of 0.4% was the lowest since at least January 1999. Now, that firm is predicting a spike in delinquencies that extends well into next year.

"Delinquency and foreclosure rates were at a generational low in February as the U.S. unemployment rate matched a 50-year low," said Frank Nothaft, chief economist at CoreLogic.

"However, the pandemic-induced closure of nonessential businesses caused the April unemployment rate to spike to its highest level in 80 years and will lead to a rise in delinquency and foreclosure," Nothaft said. "By the second half of 2021, we estimate a four-fold increase in the serious delinquency rate, barring additional policy efforts to assist borrowers in financial distress."

Forbearance and delinquency in disconnect

Black Knight's report said, "There is a disconnect between the delinquency numbers and the forbearance numbers."

"With foreclosure moratoriums in place in response to COVID-19, both foreclosure starts and foreclosure sales (completions) hit record lows. In fact, starts were down more than 80% from this time last year while foreclosure sales saw a 93% decline over the same period," the company said.

The Mortgage Bankers Association said earlier this week that an estimated 4.1 million homeowners are now in forbearance, up 3,164% from the 0.25% of mortgage volume in forbearance in early March.

Also this week, Fannie Mae and Freddie Mac extended until at least June 20 their moratorium on foreclosures and evictions for the trillions of dollars in single-family home mortgages they back. It had previously been set to expire earlier this week on May 17.

"During this national health emergency, no one should be forced from their home," said Mark Calabria, director of the Federal Housing Financing Agency, which oversees the government-sponsored enterprises. "Extending the foreclosure and eviction moratoriums protects homeowners and renters with an enterprise-backed mortgage and provides certainty for families."

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Marc Rapport has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.