End-of-year arrears, a challenge for 2021
Mortgage performance naturally deteriorated over the course of 2020. Black Knight, in its “first look” of December data, noted that the year ended with 1.54 million mortgages in arrears and 1, 7 million more who were severely overdue than at first, calling it “a threat reminder of the market challenges in 2021. “
The situation continued to improve at the end of the year. The National the delinquency rate fell by 3.9% from November to December and the resulting rate of 6.08% of all active loans was the lowest since April 2020, when the financial effects of the pandemic began. He is however, almost 79% more than at the end of 2019.
Serious defaults, loans 90 days or more past due but not foreclosed, also declined, falling from 47,000 loans to 2.146 million loans. As of December 2019, there were 1.719 million of these loans.
There were 7,100 foreclosure starts during the month. Moratoriums on foreclosures are still in place and are likely affecting these numbers, but December is starting, while a 62% increase from November, were down 82% from the previous December. Seizures for the year as a whole amounted to 40,000, an annual decline of more than 70 percent.
A total of 3.251 million loans were 30 days or more past due but not in foreclosure, down 130,000 month-over-month, but 1.448 million more loans than they were a year ago earlier. Loans in foreclosure amount to 178,000, 2,000 more than the previous month but 67,000 less than the December 2019 inventory. This drop is probably also an artefact of the moratoriums.
The states with the highest non-current loan rates in December were Mississippi, Louisiana, Hawaii, West Virginia, and New York. All had rates above 8 percent.
Prepayment activity remains strong, probably mainly due to the high levels of refinancing. The monthly mortality rate (SSM) of 3.15% was up 11.7% from November and 112% above the SSM at the end of 2019.
The company also released its weekly mortgage forbearance report covering the period ended Jan. 19. As has become common during the course of the program, the number of active plans tends to increase in the middle of the month and did so last week, increasing by 17,000. The number, however, is down 2.1% from in the previous month. There were 2.74 million homeowners withheld at the end of the reporting week, representing 5.2% of all active mortgage loans and outstanding principal balances totaling $ 548 billion. Black Knight says the total number of active plans has hovered between 2.71 and 2.83 million since early November, when the number of CORVIN-19 cases began to rise with the closures.
Suppression rates also slowed noticeably after the six-month point of forbearance plans. This suggests that borrowers who remain on hold are likely to be hit harder by the economic downturn and are therefore less likely to leave these plans before the end of the 12-month period allowed.
A weekly decline of 3,000 forborne Fannie Mae and Freddie Mac (GSE) loans was more than offset by an increase of 15,000 plans among portfolio and private label (PLS) mortgages and 5,000 FHA / VA loans additional. Active plans now represent 3.3% of total GSE portfolios, 9.4% of FHA and VA loans and 5.2% of those managed for PLS and banking portfolios.
Black Knight concludes: “Although we are far from the peaks we saw last summer in the total number of active forbearance plans, the rate of improvement continues to be relatively slow. We see fewer new plans starting, this number remaining stable at the three-week average and down 30% compared to the same week in December. At the same time, plan deletions remain low, this week recording the second lowest weekly deletion volume seen to date since we started monitoring the situation in April. “
The company will provide more detailed information on December loan performance in its Mortgage Monitor. It will be released on February 1.