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Measuring Mortgage Hardships and Delinquencies

According to TransUnion’s new Monthly Industry Snapshot [1], the percentage of accounts in a hardship status has increased significantly across all loan categories and risk tiers, including mortgages. However, as the report notes, Aggregate Excess Payment, TransUnion’s measure of consumer liquidity, has increased as forbearance programs reduce monthly minimum payment obligations.

“The COVID-19 pandemic continues to unfold, creating unprecedented challenges for lenders and consumers in the U.S. and around the world,” said TransUnion EVP, Financial Services, Jason laky. “As such we expect changes in consumer behavior and lender accommodations, such as increased forbearance, will be present in the consumer credit file. We also anticipate that federal stimulus programs will provide relief to some consumers, and have impacts on their ability to manage new and existing debt. These changes are taking place rapidly, which is why we’re introducing a monthly summary of key credit metrics for the four major loan categories: credit card, auto finance, mortgage, and unsecured personal loans.”

The nationwide delinquency rate hit its highest single-month increase in history in April, according to the First Look at April mortgage performance data from Black Knight. According to Black Knight, some 3.6 million homeowners were past due on their mortgages as of the end of April the highest number since January 2015.

TransUnion’s report revealed that 4.998% of mortgage accounts were in hardship, up from 0.476% the previous month. By loan type, FHA loans had the largest percentage of loans experiencing hardship, with 9.48% of loans in April 2020 undergoing hardship, compared to just 0.34% in March. Meanwhile, risk distribution remained relatively steady across all risk tiers, with 51% of mortgages as “super prime,” 19.9% as “prime plus,” 15.4% as “prime,” 8% as “near prime”, and 5.7% as “subprime.”