1.45 million homeowners are seriously delinquent as moratorium on foreclosures expires

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Mortgage delinquencies are decreasing but they are still much higher than before the start of the pandemic. (iStock)

National mortgage delinquency rates fell from 5% in July to 4.14% – half of the level they were in May – but about 1.45 million homeowners were still seriously behind on their mortgage payments, according to de new data from Black Knight.

Defaults have improved in 12 of the past 14 months, and both increases were related to the calendar month and declining dates, rather than a deterioration in performance.

“While overall delinquency volumes continue to approach pre-pandemic levels, the number of serious delinquencies was still considerably high as the federal government foreclosure moratoriums expired end of July, ”Black Knight said in his report.

About 1.45 million borrowers were in arrears for at least 90 days at the end of July. These borrowers are in arrears but not yet in foreclosure and are $ 1 million more than at the start of the pandemic, data shows. However, many of them are currently the subject of forbearance plans with their mortgage agents.

If you’re coming out of forbearance and looking to make sure you don’t go into foreclosure, consider refinancing your mortgage to lower your monthly payments. Visit Credible to use a mortgage calculator and see how much you could save.

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Bad debts fell sharply in the second quarter

Foreclosure starts remained weak in July, the last month of the moratorium on foreclosures on federally guaranteed mortgages, down 58% from the same period last year, according to the report. Black Knight. The number of loans in active foreclosure fell by 5,000 to a new record.

Looking at the second quarter of 2021 as a whole, data from the Mortgage Bankers Association (MBA) puts the national mortgage default rate at 5.47%, according to its National delinquency survey.

“Mortgage delinquencies on all types of loans – conventional, FHA and VA – are at their lowest levels since the first quarter of 2020,” said Marina Walsh, MBA vice president of industry analysis. “The drop in delinquency rates for FHA loans and VA loans was the largest quarterly drop for both in the history of the MBA survey dating back to 1979.

“Much of the improvement in the second quarter can be attributed to loans past due at a later stage – those 90 days or past due, but not in foreclosure,” Walsh said. “In fact, the 90-day delinquency rate fell 72 basis points, another record drop in the survey. It appears that borrowers in later stages of default recover due to several factors, including improvement in employment and other economic conditions, the availability of home support options after forbearance, and a strong housing market that offers additional alternatives to homeowners in difficulty. “

One of these options offered by a strong housing market includes mortgage refinancing, which helps homeowners make their monthly mortgage payments while lowering costs. With lower interest rates, homeowners could save a lot. Visit Credible to see how much you could save and pre-qualify in minutes without affecting your credit score.

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How to avoid foreclosure

As Walsh pointed out, delinquency is declining at a significant rate due to the many options available to homeowners thanks to government programs and a strong housing market. Here are some options available to homeowners to avoid foreclosures:

Abstention: Homeowners struggling to make monthly payments still have option to enter COVID-19 forbearance after Biden administration extended the deadline as of September 30, 2021. This deadline applies to loans guaranteed by the Department of Housing and Urban Development (HUD), Department of Veterans Affairs (VA) and Department of Agriculture (USDA). The Federal Housing Finance Agency (FHFA) has provided similar relief for mortgages guaranteed by Fannie Mae and Freddie Mac, and this option has no deadline.

Refinance: Homeowners also have the option of refinancing their mortgage in today’s strong housing market. Even homeowners who missed payments and were on COVID-related forbearance may still have the option to refinance their mortgage. By comparing several mortgage lenders at once, homeowners can find the best rates available. Visit an online marketplace like Credible to find the best option for you and save on your monthly payment.

Modification: If you can’t refinance your mortgage but are still having trouble, a loan modification could change the terms of the loan. Contact your mortgage agents to review your options, such as lowering your interest rates or changing other loan terms.

If you are looking for options for your mortgage, contact Credible to speak to a mortgage expert and get all your questions answered.

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Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.


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