Mortgage Delinquencies Reach 20-Year High
The rising number of mortgage delinquencies is bad news for borrowers, lenders, and investors.
Falling behind on mortgage payments has serious consequences, but unfortunately, a substantial number of current homeowners are struggling to pay their mortgage bills.
In fact, the most recent data from CoreLogic shows a higher number of mortgage delinquencies than at any time since 1999, when the financial data and analytics firm began tracking this metric.
Unfortunately, things could get worse before they get better. However, if you are struggling to make your payments, there are often solutions that can minimize the financial consequences.
There's a record number of mortgage delinquencies, and more borrowers could find themselves unable to pay
CoreLogic measures the number of borrowers four months behind on mortgage payments. Their most recent data -- for July of 2020 -- showed the 120-day delinquency rate at 1.4%. This is up 0.12% compared with the same period last year. It's also the highest level in its tracking history.
The chief economist at CoreLogic said there was a spike in 90-day delinquencies as well. This means that a growing number of homeowners are falling behind in paying their monthly mortgage bills, and the 120-day rate could get even higher.
The number of people at least 90 days past due -- which includes those in the 120-day delinquent group -- jumped up to 4.1%. That's a substantial increase compared with a 1.3% 90-day+ delinquency rate during the same period last year. This is the highest number of people at least three months behind since April 2014.
While some states, including New York, New Jersey, and Florida, saw an especially large increase in the number of people who are behind on their loans, the sad reality is that serious mortgage delinquencies were up in every state as measured year over year. And if trends continue, an estimated 2 million mortgage loans could become seriously delinquent in 2021.
There's one bright spot -- these delinquency numbers include homeowners who have put their loans into forbearance as permitted by the Coronavirus Aid, Relief, and Economic Security Act. The CARES Act allowed for homeowners with government-backed mortgages to request up to 180 days of forbearance, with the possibility to renew that pause in payments for another 180 days.
Those in forbearance will not have their accounts reported as delinquent to credit bureaus, nor will they be charged penalties for not making payments during this time. And lenders must provide them with opportunities to pay any balance accrued during the forbearance period, so they will not have to make a lump-sum payment to get current.
While those borrowers whose loans are in forbearance aren't making progress on paying down their mortgages, they are at least not risking foreclosure or damaging their credit histories. In fact, any borrowers currently behind on their payments -- or at risk of falling behind -- and who are not in a forbearance program should contact their lender ASAP to explore options.
If you have a government-guaranteed loan, you should not be at risk of default right now, due to the CARES Act protections. But consider asking for forbearance. Even if you don't have a government-backed mortgage, there's still a good chance your lender will work something out with you. It's best to reach out to your mortgage loan provider ASAP -- ideally before you miss a payment -- so you can protect your credit score and your home.
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