MReport August 2020

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M R EP O RT | 45 SERVICING THE LATEST O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T Mortgage Delinquency Tops 6% in April More properties became newly delinquent in April than in any single month during the Great Recession. T he share of mortgage loans that became delin- quent in April outpaces anything seen during the Great Recession and is the highest rate on record in 21 years, according to CoreLogic's data. During April, 3.4% of mortgages went from cur- rent to 30 days past due, outpacing the 2% high recorded in late 2008. The overall national delin- quency rate in April stood at 6.1%, according to CoreLogic's Loan Performance Insight Report. CoreLogic clarified that all loans in forbearance are counted in its report as in past-due or delin- quent status. Not only does April's delin- quency rate mark the highest in four years, but it also brings an end to 27 straight months of falling annual delinquency rates. "Despite the scale and sudden- ness of the pandemic, mortgage delinquency has yet to emerge as a major issue, thanks to govern- ment COVID-19 relief programs and other housing finance industry efforts," said Frank Martell, President and CEO of CoreLogic. "As the true impact of the economic shutdown dur- ing the second quarter of 2020 becomes clearer, we can expect to see a rise in delinquencies in the next 12-18 months—especially as forbearance periods under the CARES Act come to a close." The share of mortgages in early-stage delinquency in April was significantly higher than the seriously delinquent shares. Instead, the serious delinquency rate wallowed to its lowest level in about 20 years, and the fore- closure rate experienced a slight decline as well. The share of loans that were between 30 and 59 days past due in April was 4.2%, a significant jump from the 1.7% recorded last April. On the other hand, the share of seriously delinquent loans, meaning at least 90 days past due, was 0.3%, down slightly from 0.4% a year ago. New York had the highest loan delinquency rate of any state, at 10%. Louisiana, New Jersey, and Mississippi had the next-highest delinquency rates. South Dakota had the lowest loan delinquency rate at 3%. Among metro areas, those that typically serve as tourist destinations are suffering high delinquency rates. For example, CoreLogic pointed out that Kahului, Hawaii; Atlantic City, New Jersey; and Las Vegas all experienced a 5 percentage point or higher rises in delinquencies in April. Miami charted the highest delinquency rate among the major metros across the nation with 11.5% of all properties in some stage of delinquency, which is 6.7 percent- age points higher than a year ago. Denver fared the best with 3.7% of properties in delinquency. The serious delinquency rate in- creased in 63 metros in April while remaining stable in 135 metros. Looking ahead, CoreLogic anticipates a spike in late-stage delinquencies and foreclosures this year. The analytics firm already released its home price predic- tion, anticipating a 6.6% decline in prices by May 2021, which would diminish many borrowers' exist- ing equity. Fewer Borrowers Making Full Loan Payments Young borrowers and low-income households are the most likely to be impacted. T hirty-two percent of Americans did not make a full, on-time housing payment is July, accord- ing to Apartment List. This is up slightly from 30% in June. The report added that missed payments are concentrated among renters, young and low-income households, and residents of dense urban areas. During the first week of July, 19% of Americans had made no housing payment, while an ad- ditional 13% paid just a portion of their monthly bill. However, of those that missed the payment in June, 89% said they paid that month's bill as of the first week of July. The report added that 43% of households earning between $25,000 and $75,000 did not pay their full housing payment in July. Additionally, homeowners between the ages of 45-60 were found to miss the most payments at 22%. An additional 7% made a partial payment. Apartment List's survey said the share of homeowners con- cerned about foreclosures rose from 14% to 17%. Black Knight's latest report stated that with 4.1 million homeowners past due on their mortgage loans, the national delinquency rate is now 7.76%. Delinquencies jumped 20% and 1.3 percentage points higher in May, which Black Knight noted, "would have been the worst single month ever recorded if it weren't for the 3.1 percentage point increase the month prior." Today's delinquency rate is up 4.5 percentage points from the 3.2% re- cord low recorded back in January. While servicers have a major task now in assessing loans in forbear- ance, Black Knight said, "this will also provide an early look at roll rates of loans in active forbearance," and the insight from this sum- mer "can be used for downstream modeling on performance and the residual volume of loans in active forbearance in coming months." The total number of loans that are either past due or in foreclosure is 4.3 million, up from 2.3 million at the end of March, according to Black Knight. However, the foreclo- sure rate is down by 5.8%.

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