Blank Knight reports “March Sees First Ever Mortgage Delinquency Increase in Early Sign of COVID-19 Impact “
Key Points
- In what’s typically the strongest month of the year for mortgage performance, delinquencies rose by 3.33%, the first March increase since the turn of the century, an early sign of COVID-19’s impact on the market
- Both the national foreclosure and 90-day delinquency rates set new record lows in March, a lingering reminder of the strength of the mortgage market heading into the pandemic
- At just 27,600 for the month, foreclosure starts also fell to their lowest level on record, as COVID-19-related moratoriums began to impact foreclosure inflows
- Prepayment activity jumped by nearly 40% in March, driven by record-low 30-year mortgage rates
- Note: For the purposes of this report going forward, the millions of homeowners who have since entered into forbearance will be counted as past due, but should not be reported as such to the credit bureaus by their servicers
Black Knight Mortgage Stats
Year-over-year trends on delinquencies and foreclosures has been impressive.
That will end in April or May.
Mike “Mish” Shedlock
March new home sales out today.
SAAR
627K
priors with downward revisions
January … 800K –> 777K
February … 765K –> 741K
Median price went from $345,900 –> $321,400
Average price went from $403,800 –> $375,300
Consumers will have more money for the stock market with all those savings.
Dow 300K?
You never know …
Still a lot of magical thinking out there. Nike swoosh is the new buzzword for recovery shape.
To infinity… and BEYOND!
So it is going to be 2008 al over again. I read a story last weekend that in anticipation of rising mortgage delinquencies JPMorgan Chase has raised the minimum credit score to 700 to qualify for a mortgage. If true this will certainly slow down the mortgage and housing business.
Banks will have capital to lend, but they will have a shortage of willing borrowers and qualified borrowers. Meanwhile, the pool of motivated sellers grows. (Both housing and vehicles) Quite the deflationary setup.
“In what’s typically the strongest month of the year for mortgage performance, delinquencies rose by 3.33%”
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To add some flesh
Black Knight:
“March typically marks the strongest month in terms of mortgage performance, with tax refunds and bonus payouts helping homeowners catch up on past-due mortgage payments On average, over the past 20 years, mortgage delinquencies have declined by 10% month over-month in March – more than 3X the average improvement of any other month.”
And early March saw decades low in mortgage interest rates.
Nobody should lose their home or be evicted from their apartment because of job impact of COVID-19 shutdown. Nor should any lender be able to demand a “balloon payment” after a period of “forgiveness”.
The lockdown was required by the governmental powers that be and so the financial powers that be are just going to have to “share the pain” and extend the terms of their loans as though the period of time the lockdowns are in force never existed.
Both debitors and creditors are impacted. This will require a systemic shift. Contracts, etc will need to be broken, etc. Boom time for lawyers.
Who will make the landlords whole? Those renting get to stay for free for nearly 4 months and they know it. About 1/3 of my 72 tenants aren’t paying right now, some due to job loss, but most because they know they can get away with it.
In July, I will undoubtedly need to spend a massive amount of time at the courthouse filing eviction. It’s going to be a massive disaster and there will be a huge backlog of evictions. What normally takes 3 weeks here in NC will likely take 2 months, all the while the property bleeds cash.
“Who will make the landlords whole? ”
…
Exactly.
Not that many Mr Potters. Many of these mortgages packaged into mbs and owned by pensions and such.
The landlords’ creditors … and all the way up the Ponzi scheme ….
As someone else said, the back payments, accumulated interest and loan balance will get rolled into a new loan for most in default. Banks really don’t want to own tens of millions of properties that they can’t sell. It really sucks all around. Debt service and taxes go on even though everything else has stopped.
Debt is a promise to pay from future earnings ( future production of goods and services which has ceased for the most part). Being driven into the dirt by government mandate does not excuse it. Once again, the bank’s balance sheets will get bigger and we get poorer, because we are not allowed to produce.
RE: “Being driven into the dirt by government mandate does not excuse it.”
I guess we’ll have to wait for all the lawsuits to see whether that still holds true under these unprecedented circumstances or not.
I’m not a lawyer but I can see a possible conflict of interest in a situation where the very entity collecting tax from you has issued orders preventing you from working to earn money to pay the tax.
Conflicts abound all over the continuum of this crisis…can’t begin to list them all…from the very top to the very bottom.
Situation analysis:
One thing I “believe” is certain…we will emerge under a different level of government control…something like China…or the lack thereof (myriad local governments). All empires rise and fall. Preparing accordingly.
The Financiers control the game and will set the rules to benefit themselves.
Corporate Governed Feudalism, here we come!
Dow 120K?