2020 ended with 2.15 million seriously delinquent mortgage loans, that is 1.7 million more seriously delinquent homeowners than when 2020 began — "a looming reminder of the challenges facing the market in 2021," according to the First Look mortgage loan performance report from Black Knight, published Friday, which includes data from the full year.
The increase exists despite continuous months of improvement; In December, the overall delinquency rate fell to its lowest level since 2020, and serious delinquencies (90+ days late) improved by 400,000 loans.
The number of seriously delinquent homeowners in 2020 hit 2.6 million—according to Black Knight, that's a 250-plus% increase in 90-day default activity.
Foreclosures, on the other hand, are at all-time lows, thanks to moratoriums and forbearance plans meant to protect distressed homeowners from facing foreclosure in the wake of the pandemic. Foreclosure starts and sales (completions) fell to record lows. Starts fell by 67% from 2019 and the year’s 40,000 completions represented an annual decline of more than 70%.
The analysts at Black Knight said prepayment activity ended the year 112% higher than in December 2019, which they say highlights a still-strong refi market going into 2021.
"Even with Freddie Mac reporting the 30-year average at 2.77% Friday morning, there are still some 16.7 million refinance candidates who meet broad-based eligibility criteria and could also cut their first mortgage rate by 0.75% or more," according to Black Knight's report, which is available on Black Knight's blog.
Black Knight's delinquency numbers count all homeowners who have missed payments, whether they are in forbearance plans or not. That said, borrowers in forbearance should not have missed payments reported to the credit bureaus by their servicers.