The final delinquency tally for December is in, with data revealing that by year’s end, 1.54 million more delinquent and 1.7 million more seriously delinquent mortgages were reported than at the start of 2020, according to a report from Black Knight. With nearly 2 million extra overdue loans in the pipe, that’s approximately 3.4 million loans in total at December’s end.
Overall, the data analytics company estimates a more than 250% increase in 90-day default activity year-over-year.
Despite this massive jump from years prior, the national delinquency rate did manage to show modest improvement in December – dropping for the seventh consecutive month to 6.08%, and the lowest level since April.
Serious delinquencies also fell to 2.15 million from 2.19 million the month prior, but remained a looming reminder of the the challenges facing the market in 2021, Black Knight said.
In the meantime, federal policy on forbearances and foreclosure moratoria pushed foreclosure starts and sales to record lows. Year-over-year starts fell 67% in 2020, and with just 40,000 completions, the year also saw a 70% decline in foreclosure sales from 2019.
However, Andy Walden, director of market research at Black Knight, said there are still a lot of unknowns as far as the cascading policies homeowners are currently protecting themselves with.
In President Biden’s Jan. 14 American Rescue Plan, he proposed an extension of the federal eviction moratorium to Sept. 30. On his first day in office on Wednesday, Biden signed an executive order that would push the moratorium to at least March 30, and on Thursday, the Department of Housing and Urban Development confirmed the extension.
“It’s something that’s going to need to be dealt with at some time. The nice part about having foreclosure moratoriums extend beyond the forbearance protections is that there are 2.7 million homeowners in forbearance right now and there’s a huge unknown of the percentage of those homeowners that are able to go back to performing,” Walden said.
In having those foreclosure protections extend beyond forbearance, Walden noted it will be easier to track and understand the data coming out of those forbearance expirations — whether it be loans going through various waterfalls, how many are back on track, how many need to be modified and so forth.
“More data dovetails more policy decisions,” Walden said.
The end of forbearance isn’t in sight just yet. The FHFA has not currently set an end date for its temporary COVID-19 forbearance policy, and the FHA announced on Dec. 21 that it was extending it’s deadline for single-family borrowers to request initial forbearance through Feb. 28.
Biden’s rescue plan features an extension of initial requests for forbearance to Sept. 30, but the proposed extension has yet to be passed.