April’s 7.08% decline in mortgage delinquencies wasn’t even half of the drop March posted, but it did manage to push the national delinquency rate to below 5% for the first time since the beginning of the pandemic, Black Knight revealed in a new report. Overall, the number of past-due mortgages fell to 4.66% in April while an additional 400,000 homeowners managed to become current on their payments.
As the market continues to churn through distressed inventory, Black Knight expects overall delinquencies to “normalize” at pre-pandemic levels by the end of 2021. However, that is if the current pace can hold.
New 30-day delinquencies actually rose 23% from March’s record lows, but are still down 33% year over year. Serious delinquencies on the other hand (loans that are 90 days or more past due but not yet in foreclosure) saw significant progress, with more than 150,000 homeowners exiting serious delinquency status.
There are still 1.8 million homeowners that are 90 days past due ― four times as many as their were prior to the pandemic. Black Knight reported the vast majority of those in this serious delinquency category are in some form of forbearance, putting the end of Q3 and beginning of Q4 as an inflection point in terms of understanding how things may shake out in a post-forbearance world.
The data analytics giant estimates the next significant round of mortgages in forbearance servicers will review will take place in June ― about 890,000 plans, many of which will be at their 15-month mark for early forbearance entrants.
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This will represent the last round of quarterly reviews before the first wave of outstanding forbearance plans is slated for their 18-month — and as for now, final — expiration at the end of September.
Signs of delinquency improvement are already present in forbearance numbers as the Mortgage Bankers Association reported in its weekly forbearance survey that the number of borrowers postponing their mortgages are now half of the survey’s peak in May 2020.
It will be some time before data companies can really measure the impact robust forbearance and moratorium measures from the Fed made on homeowners who truly needed it. However, foreclosure starts and active foreclosure inventory hit new record lows in April. According to Black Knight’s delinquency report, just 3,700 starts were initiated throughout the month and there are just 153,000 currently in active foreclosure.
Mortgage prepayments also fell nearly 23% in April to their lowest level since May 2020, reflecting the impact on refinance activity of interest rate spikes earlier this year. Black Knight’s April Originations Market Monitor Report painted a similar picture, with overall rate lock volume down 11.3% in April, with declines across purchase locks (-6%), cash-out (-13%) and rate/term (-20%) refinance locks.
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