Mortgage defaults below 6% for the first time since March

0

For the first time since March 2020, the national mortgage delinquency rate fell below 6% to 5.9% in January, according to data from Black Knight Wednesday.

At the current rate of improvement, the data giant estimates that 2.1 million borrowers remain in arrears for 90 days or more, although they are yet to be entered. Although modest improvements in mortgage delinquency have occurred over the past several months, loans considered seriously past due are still five times higher than pre-pandemic levels.

Thanks to widespread moratoria, borrowers have been able to avoid evictions and foreclosures for some time now. Foreclosure starts and selling activity hit all-time lows in January, with starts down 86% year-over-year and sales down more than 95%.

the FHFA more recently extended COVID-19 lockdown abstention moratoriums until March 31, 2021 and Department of Housing and Urban Developmentalso kicked foreclosure can further down the road for FHA and USDA loans as of June 30, 2021.

While these expansions have reduced the risk of short-term lockdown, they also serve to extend the cooldown, Black Knight said. But even with these continued extensions, Black Knight estimates that 1.8 million mortgages will still be seriously in arrears at the end of June, when those moratoria are expected to be lifted.


From abstention to post-abstention: how to make the process effective

To cope with the large volume of loans still in forbearance, mortgage agents must have functional, flexible and efficient forbearance processes in place. Here are some concrete steps to create this process.

Presented by: FICS

As service officers prepare to handle more than one million borrowers who will feed the mortgage delinquency pipeline, recent research by the Urban Institute believes that a the impending foreclosure crisis is not really on the horizon.

A host of FHA and FHFA loss mitigation stunts allow borrowers who are not on forbearance programs to be eligible for loss mitigation options, including mortgage modifications. Yet not all borrowers will be eligible for a modification, and some will be forced to downsize or rent, the Urban Institute noted.

Borrowers also have the most available equity in history, and those with high equity in their home could leave their home, if they needed to, with their credit intact and potentially some cash in. hand.

However, about 626,000 of the 3.2 million delinquent borrowers have public loans in Ginnie mae securities. Due to their initially high loan-to-value ratios, these borrowers are likely to have less equity in their home.

“Our analysis shows that, even among defaulting borrowers, less than 1% have negative equity and 5.5% have near-negative equity. By comparison, in the aftermath of the Great Recession, about 30% of homes had negative or near-negative equity, but the number is now 3.6%, ”the Urban Institute report says.

Leave A Reply

Your email address will not be published.