Key Highlights

  • New report by Black Knight estimates there may be +1M excess delinquencies once first wave of forbearances hit 12-month expiration in March 2022
  • Early stage delinquencies fell -9% in August while serious delinquencies rose +5% in August
  • 9% of first lien holders made monthly mortgage payment in September

There is good news and not-so-good news in the world of mortgage delinquencies. According to a new report by Black Knight, mortgage delinquencies are expected to be “above normal” pre-pandemic levels until March 2022. Black Knight anticipates there to be more than +1M excess delinquencies once the first group of forbearances expires in March 2021.

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That said, some 41% of homeowners in COVID forbearance have exited the program. Additionally, the uptick in forbearances during the month of August was the mildest uptick in five months. Could 90-day mortgage delinquencies be peaking?

Based upon improved payment activity in August with 88.9% first-lien mortgage holders paying their monthly mortgage payment, Black Knight estimates that the national delinquency rate may fall in September. Black Knight also estimates that less than 1M mortgage holders have negative equity in their homes.

Ben Graboske, data and analytics president of Black Knight, said, Just 54,000 loans at present represent significant risk – having left forbearances, are past due and not engaged in loss mitigation efforts. Seventy percent of those (54,000 loans) were already delinquent in February, before COVID became a factor.”

Half of all active forbearances, a whopping 2.1M, were to expire in September. According to Black Knight, 46% of that 2.1M chose to extend their forbearance term.

Matt Komos, vice president of research and consulting at TransUnion, believes that Q4 2020 and beyond will inform us about consumer financial and credit health as forbearance payment programs are set to expire.

 

Thanks to Knight Black, TransUnion and HousingWire.

Also read: Late-Term Delinquencies Rising on Forbearances, Combining Hurricane Season with COVID-19, Mortgage Bailouts Swell to 4.1M