2020 ends with 3.4 million loans in arrears

The final delinquency tally for December is underway, with data showing that at the end of the year 1.54 million more overdue mortgages and 1.7 million more overdue mortgages were reported from early 2020, according to a report by Black Knight. With nearly 2 million more overdue loans in the pipeline, or about 3.4 million total loans at the end of December.

Overall, the data analytics company estimates a more than 250% increase in default 90-day activity year over year.

Despite this massive jump from previous years, the national delinquency rate managed to show a slight improvement in December – falling for the seventh consecutive month to 6.08%, and the lowest level since April.

Serious defaults also fell to 2.15 million from 2.19 million the previous month, but remained an imminent reminder of the challenges facing the market in 2021, Black Knight said.

Meanwhile, federal policy on tolerances and moratoriums on foreclosures have pushed housing starts and sales to record levels. Year-over-year housing starts fell 67% in 2020, and with just 40,000 completions, the year also saw a 70% drop in foreclosure sales from 2019.

However, Andy Walden, director of market research at Black Knight, said there is still a lot of unknowns when it comes to the cascading policies homeowners are currently protecting themselves with.

In President Biden’s On January 14, the American Rescue Plan proposed an extension of the federal moratorium on evictions until September 30. On the first day of his tenure, Wednesday, Biden signed an executive order that would push the moratorium. at least March 30, and Thursday, the Department of Housing and Urban Development confirmed extension.

“This is something that will have to be sorted out at some point. The advantage of having foreclosure moratoriums extend beyond forbearance protections is that there are 2.7 million homeowners in forborne right now and there are a huge unknown in the percentage of those owners who are able to return to performance, ”said Walden.

By making these foreclosure protections extend beyond forbearance, Walden noted that it will be easier to track and understand the data coming from these forbearance expirations – whether it is of loans going through various waterfalls, how many are back on track, how many need to be changed and so on.

“More data aligns with more policy decisions,” Walden said.

The end of tolerance is not yet in sight. the FHFA has not currently set an end date for its COVID-19 temporary abstention policy, and the FHA announced on December 21 that he was extend its deadline for single-family borrowers to apply for initial forbearance until February 28.

Biden’s bailout includes an extension of initial forbearance requests until September 30, but the proposed extension has yet to be passed.

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