Key Highlights

  • Number of seriously delinquent mortgages jumped to 10-year high in July
  • Serious delinquencies +1.8M over pre-pandemic levels

We’re beginning to see into the future of seriously delinquent mortgages. According to a most recent report by Black Knight, there were 2.25M home loans that were seriously delinquent mortgages in July.

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Black Knight said via its report, “Serious delinquencies were up +20% from June and are now the highest they’ve been since early 2010. In total, serious delinquencies are now 1.8M over pre-pandemic levels.”

Simultaneously in July, the overall delinquency rate dropped to 6.91% from June’s 7.59% as the number of new forbearances dropped by 340,000 from June.

States with the largest shares of delinquent home loans in July included…

  • Mississippi at 11.77%
  • Louisiana at 10.77%
  • New York at 9.66%
  • Hawaii at 9.6%
  • New Jersey at 9.33%

The Mortgage Bankers Association (MBA) just reported that the forbearance rate for Fannie Mae and Freddie Mac backed mortgages dropped to 4.94% during the first week of August. The MBA also reported that the forbearance rate dropped 23 basis points from the last week in July to 7.21% during the first week of August for 3.6M mortgages.

Other important mortgage news points to a delay until December 1, not a rescission, of a proposed Federal Housing Finance Agency (FHFA) +0.5% surcharge to refinance mortgages sold to Fannie Mae and Freddie Mac. Such a surcharge amounts to an additional cost of $1,400 to homeowners seeking to refinance their existing mortgage loans. Know that residential refinance mortgages made up nearly two-thirds of all home loans in Q2 2020.

Industry lenders and homeowners alike were up in arms about this FHFA proposal scheduled to go into effect on September 1. Dave Stevens, former president and CEO of the MBA and former commissioner of the Federal Housing Authority (FHA), said, “If true, it seems clear that Director Calabria (of the FHFA) listened to industry concerns about the impact of this short time frame to implement, And while the logic of the fee remains in question (during a recession), this is a good sign and hopefully will lead to a change in behavior going forward where impact assessment conversations can take place prior to major policy announcements.”

 

Thanks to HousingWire, Mortgage Bankers Association and Black Knight.

Also read: Loans to First-Time Buyers Showing Record Delinquencies, Tappable Home Equity Hits Record $6.5T in Q1 2020, Residential Refinances Over 50% of Home Loans in Q1 2020