The shattering impact that the pandemic could have on an average homeowner’s ability to make mortgage payments is just starting to be felt.
In August, CoreLogic reported that 6.6 percent of mortgages were in some state of delinquency — a 2.9 percent rise from the same time last year.
The hit comes primarily from late-stage delinquencies — mortgage payments that are late by more than 90 days are at 4.3 percent, up from only 1.3 percent last August. Adverse delinquencies are at 0.8 percent, up from 0.6 percent last year, while early-stage delinquencies are at 1.6 percent, down from 1.8 percent last year.
Foreclosures, in which the government seizes a home due to an owner’s inability to pay, are down to 0.3 percent from 0.4 percent last year.
CoreLogic
“Five months into the pandemic, the 150-day delinquency rate for August spiked to 1.2 percent,” Dr. Frank Nothaft, chief economist at CoreLogic, said in a press statement. “This was the highest rate in more than 21 years and double the January 2010 peak during the home-price bust.”
While the current numbers can make it seem as if only owners most behind on their payments are affected, CoreLogic’s analysts argue that it paints a sobering picture of nationwide financial precarity amid the coronavirus outbreak. With pandemic-related unemployment still sweeping the country, many owners are not bringing in the income necessary to make up missed payments. Many others who are current are also one or two missed payments away from financial disaster.
All states saw increases in their serious delinquency rates while those whose economies depend heavily on tourism or entertainment were hit the hardest. Nevada, Hawaii, New Jersey and Florida saw the biggest spikes in the country at 5.3, 4.9, 4.6 and 4.5 percentage points, respectively.
CoreLogic
While current government forbearance programs are keeping those in late-stage delinquencies from immediately losing their home, the missed payments stack up and will need to be repaid eventually. As millions all over the country are out of work due to the pandemic, making up payments may not be possible for many — the end of forbearance programs can prompt an even more serious foreclosure crisis sometime in 2021.
“Forbearance programs continue to reduce the flow of homes into foreclosure and distressed sales and has been the key to helping many families who have been particularly hard hit by the pandemic,” Frank Martell, president and CEO of CoreLogic, said in a press statement. “Even though foreclosure rates are at a historic low, the spike in 150-day past-due loans points to bumpy waters ahead.”