3.6 Million Homeowners Missed Mortgage Payments In April—A 1.6 Million Surge

Real Estate

TOPLINE

Mortgage delinquency rates nearly doubled and total delinquencies reportedly increased by 1.6 million in April, the largest single-month jump in history, though the majority are covered under Cares Act forbearance programs.

KEY FACTS

3.6 million homeowners were past due on their mortgages as of the end of April, the largest number since January 2015, according to a report from Black Knight, a mortgage technology and data provider.

The national delinquency rate nearly doubled to 6.45% from 3.06%, which also represents a record increase (almost three times the previous single-month record set back in late 2008.)

An additional 2.4 million workers filed for temporary unemployment benefits last week (bringing the nine-week total to more than 38 million), with 47% of adults reporting that they or another person in their household has lost income since mid-March.

The state with the highest delinquency increase was Nevada (+5.2%), followed closely by New Jersey (+5.1%), and New York (+4.9%), while Miami (+7.2%) and Las Vegas (+6.2%) topped the 100 largest metro areas.

Under the CARES Act, homeowners experiencing financial hardship due to Covid-19 can be granted forbearance on a federally backed mortgage loan.

Critical quote: 

“While April saw a record single-month increase in the national delinquency rate, the data shows that the vast majority of new delinquencies represent borrowers who are currently in COVID-19-related forbearance programs,” said Andy Walden, economist and director of market research at Black Knight.

Key Background:

Lenders have provided relief for homeowners affected by the coronavirus pandemic. Per the latest Forbearance and Call Volume Survey by the Mortgage Bankers Association (MBA), the number of loans in forbearance increased dramatically this week as well, as 4.1 million homeowners had requested a forbearance plan (8.2% of loans). By comparison, less than 1% of loans were in forbearance in early March. Mortgages backed by Ginnie Mae had the greatest overall share of loans in forbearance by investor type (11.3%). According to Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, record-low mortgages rates are sustaining the refinance wave, helping homeowners lower their mortgage payments and save money during these challenging times.

Further Reading:

Mortgage delinquencies surge by 1.6M in April, the biggest monthly jump ever (USA Today)

Homeowners stopped paying mortgages in record numbers in April (Washington Post) 

Share of Mortgage Loans in Forbearance Increases to 8.16% (MBA)

2.4 Million Workers Filed For Unemployment Last Week, Bringing Total To More Than 38 Million (Forbes) 

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