The number of seriously delinquent mortgages fell by 43,000 in September – the first drop in mortgages 90-days past due since the beginning of the pandemic, Black Knight said in a report on Thursday.
According to the report, more than 2.3 million homeowners – five times the number at the beginning of 2020 – remain 90 or more days past due, but are not in foreclosure. As moratoriums and forbearance maintain stability for borrowers, only 4,500 foreclosure starts were reported for September.
Whereas seriously delinquent mortgages typically peak around three to four months following a natural disaster, COVID-19’s upward pressure lasted over five months. Black Knight’s August report revealed that if delinquencies followed previous natural disaster recovery patterns, mortgage delinquencies were not expected to return to pre-pandemic levels until March 2022.
However, some early-stage delinquencies are already showing improvement, as loans rolling from current to 30-days delinquent, as well as the number of borrowers less than 90-days delinquent, have begun to return to pre-pandemic levels as of September, according to the report.
Examining delinquencies on a state level, Mississippi, Louisiana, Hawaii, Texas and New York posted non-current percentages all above 8%, whereas Montana, Oregon, Colorado, Washington and Idaho boasted non-current percentages below 5%. For Black Knight, non-current totals combine foreclosures and delinquencies as a percent of active loans in that state.
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The pre-payment rate, or single monthly mortality, measures the percentage of mortgages in the mortgage-backed security pool that will be paid off early. Fueled by record low rates and an elongated home-buying season, prepayment activity jumped above 3% in September for the first time in 16 years.
Black Knight’s McDash Flash Payment Tracker also revealed an increased number of first-lien mortgage holders were making their monthly payments – up to 88.9% as of Sep. 22, rising from 88.6% in August, and 87.5% at the same time in June.
Overall, the national delinquency rate fell to 6.66%, down from 6.88% in August, though still 3.27% above pre-pandemic levels.