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Late-term mortgage delinquencies rise on forbearances

Home loans 90 days or more overdue rose to the highest level since 2010, Black Knight says

The number of seriously delinquent mortgages, meaning payments overdue by 90 days or more, soared to a 10-year high during July in a tally that counts forbearances.

There were 2.25 million home loans that were seriously delinquent last month as borrowers took advantage of a provision of the CARES Act that allows people impacted by COVID-19 to suspend payments for up to a year, according to a Black Knight report on Friday.

“Serious delinquencies were up 20% from June and are now the highest they’ve been since early 2010,” Black Knight said. “In total, serious delinquencies are now 1.8 million over pre-pandemic levels.”

The overall delinquency rate, measuring all mortgages with payments 30 days or more overdue, fell to 6.91% from 7.59% in the prior month as the number of new forbearances dropped, Black Knight said. Measured as a number, rather than a share, the number of late mortgages dropped by 340,000 from June, the report said.

The top five states with the largest share of delinquent home loans in July was led by Mississippi, at 11.77%, followed by Louisiana, at 10.77%, New York at 9.66%, Hawaii at 9.6%, and New Jersey at 9.33%, according to the report.

While the CARES Act forbids forbearances to be reported to credit bureaus as late payments, the mortgage industry still tallies the suspended payments as delinquencies.

The forbearance rate for mortgages backed by Fannie Mae and Freddie Mac dropped to 4.94% in the first week of August, the first time it’s been below 5% since April, the Mortgage Bankers Association said in a report on Monday.

The rate for mortgages backed by government-sponsored enterprises, or GSEs, fell 25 basis points from the prior week, according to the report.

Overall, the forbearance rate fell 23 basis points from the prior week to 7.21%, representing 3.6 million mortgages, MBA said.

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