Efforts made by both federal and local governments and other agencies to curb economic consequences of the COVID-19 pandemic have prevented the loss of homes and subdued the mortgage-delinquency rate, according to the economists at CoreLogic. That said, the researchers recognize that millions of households remain behind on payments and are facing financial hardship.
CoreLogic's latest Loan Performance Insights covers July data. It shows 4.4% of all mortgages in some stage of delinquency. That is a year-over-year decrease of 2.7 percentage points, but the rate remains elevated compared to pre-pandemic February 2020 when it sat at 3.6%. Seriously late payments are at 3%, down from 3.4% in June. Those 90+ day delinquencies have been dropping over the past 10 months and are at the lowest rate since May 2020, yet they remain significantly high.
“While job and income growth has helped to push delinquency rates down, there are many families that remain in financial distress,” said Dr. Frank Nothaft, Chief Economist at CoreLogic. “More than one million borrowers had missed six or more payments as of June, triple the number of borrowers pre-pandemic. CoreLogic analysis found that as of June 2021, borrowers in forbearance and behind on mortgage payments had missed an average of 10 monthly payments.”
Because it covers data from July, the last month of the foreclosure moratorium, the loan performance report from CoreLogic shows record-level foreclosure lows. (A different report covering August numbers shows foreclosure activity remains low). CoreLogic reports that the moratorium helped move the foreclosure rate to a new generational low.
The researchers say borrowers would benefit from improved education on available relief programs, pointing to a CoreLogic survey of mortgage holders in which nearly half of respondents said they do not understand government assistance programs. A lack of information, they say, could be contributing to higher overall delinquency rates.
"The downward trend in delinquencies, especially serious cases, is very encouraging—and a testimony to the impact of the significant economic rebound over the past six months, as well as government stimuli, record-low mortgage rates and loan modification options,” said Frank Martell, President and CEO of CoreLogic. “Providing resources to homeowners experiencing distress to help educate them on available government and private-sector support will aide in shrinking delinquency and foreclosure rates even more over the remainder of this year.”
The full report is available on CoreLogic.com.