Home Mortgage Delinquencies Rise - Biggest Record in April

EDITOR NOTE: Last April saw the largest increase in home mortgage delinquencies on record--an astounding 1.6 Million. Are we about to see yet another collapse in the housing market? There’s a possibility that these delinquencies may decrease in the months to come as states attempt to reopen and employees get back to work. But given the number of jobs lost, the likelihood of many small and midsize businesses going bankrupt, and  the projection of the unemployment rate hovering anywhere from 20% to 30% (according to the Federal Reserve), it’s likely that these mortgage loan delinquencies may quickly turn into a massive wave of defaults, possibly larger than what we saw in the 2008 financial crisis.

(Bloomberg) -- Delinquencies on U.S. home loans surged by 1.6 million in April, the biggest one-month gain ever, as soaring job losses fueled a 90% jump in missed payments and government programs offered penalty-free delays.

Mortgages at least 30 days in arrears almost doubled to 6.45%, the highest rate since January 2015, according to data compiled by Black Knight Inc. About 3.4 million loans were more than 30 days late and an additional 211,000 properties were in foreclosure or on track for repossession by lenders.

A federal relief program allows borrowers impacted by the virus an initial six-month payment deferral without penalty. About 4.7 million borrowers were in forbearance as of May 12, according to Black Knight.

“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.

The pace of delinquency increases is unprecedented but it’s still uncertain whether the volume of problem loans will return to the levels they reached after the last decade’s foreclosure crisis. About 7.9 million mortgages were noncurrent in January 2010, according to Black Knight.

Employers cut a record 20.5 million jobs in April and the unemployment rate tripled to 14.5% as shelter-in-place health orders pummeled the economy.

Other report highlights:

Metro areas with the biggest month-on-month delinquency increases were Miami, Las Vegas and New York City.Mississippi had the highest rate of late payments at 11.9%, followed by Louisiana and New York.New York state’s delinquency rate almost doubled from a year earlier to 9.8%. It peaked at 13.9% in December 2012. New Jersey’s delinquency rate hit 9.4%, more than double April 2019. It also peaked in December 2012 at 16.8%. California’s noncurrent loan rate was 5.7%. It peaked at 15.7% in February 2010.The number of loans in foreclosure declined nationally amid moratoriums halting the process.

Originally posted on Yahoo! Finance