Good News and Bad News
The Black Knight Mortgage Monitor for July has a bit of good news and bad.
The Good News
- Mortgage delinquencies continued to improve in July, falling 9% from June, with more than 340K fewer past due mortgages than the month prior.
- Early-stage delinquencies (30 days past due) have fallen below their pre-pandemic norms. This is a good sign that – at least for the time being – the inflow of new COVID-19-related delinquencies has subsided.
- Though foreclosure starts ticked up slightly for the month, COVID-19 foreclosure moratoriums are keeping both foreclosure starts and completions at record lows.
- Driven by record-low mortgage interest rates, prepayment activity edged slightly higher in July, hitting its highest point since early 2004.
The Bad News
- Some 376K homeowners became 90 or more days past due in July.
- Serious delinquencies were up 20% from June and are now the highest they’ve been since early 2010.
- In total, serious delinquencies are now 1.8M over pre-pandemic levels.
Forbearance Plans
* Figures from Black Knight’s McDash dataset extrapolated to estimate the full market
** Other categories include portfolios, private label, and other other entities
Forbearance Stats
- According to Black Knight’s McDash Flash data set, the number of mortgages in active forbearance remained flat over the past week, with a 15K reduction among GSE mortgages offset by a 5K raise in FHA forbearances and a 10K increase among portfolio/PLS held loans.
- As of August 18, 3.9M homeowners remain in active forbearance, representing 7.4% of all active mortgages, unchanged from last week. Together, they represent $833 billion in unpaid principal.
- Some 5.4% of all GSE-backed loans and 11.6% of all FHA/VA loans are currently in forbearance plans. Another 8% of loans in private label securities or banks’ portfolios are also in forbearance.
The number of people in forbearance plans has stabilized, but the total amount has risen to $833 billion.
Looking Ahead
The weekly $600 pandemic benefit checks stopped due to congressional bickering on July 25.
We are now in the fourth week of missed weekly checks.
This will send the delinquency and forbearance numbers higher at some point.
For discussion of the latest unemployment claims and those collecting pandemic benefits, please see Unemployment Claims are Back Above the One Million Mark.
Also note the IRS Projects Millions of Jobs Will Vanish for Years.
Mish
Our loan is in forbearance and it is NOT being handled the way you described. All we have to pay at the end of the forbearance is the interest (which for us is around $500 per month). They are going to let us spread that out over 4 or 6 months (I don’t remember which at the moment). In addition, if we STOPPED extending the forbearance before the program end date (12/31/20) then we WOULD have to pay all the missed payments “up front.” However, if we keep extending the forbearance, then the monthly payments we missed are just added to the back end of the mortgage and the payoff date is just going to be extended the amount of months we missed. All in all we are satisfied with this help because Covid 19 fallout has really taken a toll on our situation (my husband and I both own our own businesses).
NAR screamed loud enough, long enough that supply was low. Now they will be screaming there is too much supply once foreclosures go to market in 12 to 18 months.
The Fed has stated over and OVER that they will spend UNLIMITED amounts of money to support asset prices, therefore the banks will not be required to let foreclosed mortgages go in auctions as in 2008/09 but will simply become the US’s biggest landlords. If house prices ever return to the level of the underlying mortgages they then can feel free to sell. But they will not have to take a loss and that will in turn support house prices. What we have right now are bidding wars breaking out for what little inventory is available on many markets. Here north of Tampa about an hour I see open houses with people waiting in their cars (in line ala covid) for their appointments to view homes.
Houses are almost universally getting over asking price.
We have become a nation of irresponsible bums who are looking for hand outs and and a free lunch. This will not end well.
always focus on the positive. it’s well below the all time high, despite all that we have going on. plus so much free money sloshing around that my guess is prices will continue to rise as investors snap up anything that comes on the market. does this headline today make it look like a distressed market?
“does this headline today make it look like a distressed market?”
…
Not yet. Credit market not like stock market. It takes months for process (from good to bad) to play out.
The current home sales a function of LOWEST RATES EVER + people fleeing urban areas.
YoY median home value up 10%. To the moooooon!
Someday, we’ll be a country of homeless, camped outside buildings owned by the descendants of today’s finance industry criminals. Some of us might not see it, but the grandkids will.
Most of the guys in finance, aren’t “criminals,” any more than those who “made money of their home,” or whose “portfolio” is “up” is.
Most of just got a job after college, bought a house, or saved as best they could.
The unavoidable fact that all they live off, is stolen goods, doesn’t in and of itself make them evil, nor criminals.
As always, evil virtually never results from “evil” people deliberately dong evil acts.
Instead it’s always the result of how “The System”, and “society” is arranged.
If “The System” rewards, and hands control over resources to, those whose incomes, wealth, status and power arises solely from resources being stolen from others, rather from them contributing anything themselves, the end result will always be what we have today: A country where, literally, virtually all property is, in fact, theft. .
But not because those who own it, are necessarily thieves in the criminal, nor even moral, sense. But instead, simply because of how “The System” and “society” is built and organized.
To make things less destructive, it’s “The System” which needs to be completely upended. Witch hunts will never achieve anything meaningful, as long as the underlying “system” consisting of nothing more than facilitating pure, crass theft, remains intact.
There is NO good news.
Early stage delinquencies are “hiding out” in forbearance … if, in forbearance, not counted as delinquent.
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“The number of people in forbearance plans has stabilized, but the total amount has risen to $833 billion”.
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True, BUT …
you need to dig a little deeper. Initial forbearance was 90 days … for many a good chance at recovery … but if you had to extend forbearance? Recovery chances plummet … as catching up on 6 months of missed payments + regular mortgage payment will be too high a hurdle for struggling households.
So, yes, total number in forbearance dropping … but the total number now contains a lot of bad eggs. How bad?
“By stage, 38.80% of total loans in forbearance are in the initial forbearance plan stage, while 60.49% are in a forbearance extension. The remaining 0.70% are forbearance re-entries.”
When the US dollar is worth nothing, will Utah lead the way to a new American
currency?
Could Goldbacks, the world’s first local, spendable, voluntary currency made of physical gold, be the alt-tender answer? The Beehive State is leading the way with the Utah Goldback, a new currency that holds legal status in the state by way of the Legal Tender Act of 2011, which recognized specific forms of gold as currency, and allowed small amounts to be used as a form of payment and monetary exchange within the state among individuals and businesses who accept it. The polymer paper bills are coated with real gold and come in denominations of 1, 5, 10, 25, and 50.
Great idea, assuming it isn’t backed by a vault full of gold plated tungsten.
Apparently the gold is in the note itself.
30 day delinquencies are more a sign of struggling than default. A choppy payment string of 30 day delinquencies is more likely in alt-a and sub-prime than prime. I wonder how many people are not paying because they qualify for forbearance. It probably helps some who need it an is a crutch or excuse not pay for others.
3.9m in active forbearance? YIKES!! Unless some kind of forgiveness plan is put in place those are almost all going to turn to short sales/foreclosure’s.
Mish, you know what pisses me off about it all? My credit score was 711 in December then I became a homeowner, never late on mortgage, never late on ANY bill, never paid just minimum on my two cards, always at least $300 and usually $800 or 1k, yet my credit score has dropped during Covid to just 649. Yes I had some unexpected expenses so credit usage has risen, but seems like every time they update my score it dropped another 20 points. So those that really are missing payments and paying late, they must have scores of like 400 by now right? I am getting tarred with the same risk brush they are.
We need a total overhaul of the credit scoring system BY LAW!
you’re income to debt ratio has a lot to do with it. You’ve said your on a fixed income on here, so I’d guess thats a big factor in your score. not a lot coming in puts you closer to the edge in their eyes. ..and rightfully so.
Yeah Russell, but in fact I actually DO have an income that cannot be lost or go down a penny while all other borrowers out there are losing their incomes and not repaying. Yet my credit score is mimicking theirs. The emphisis should not be on utilization so much as on time >minimum payments. For one thing the stupid website has been telling me for MONTHS my score would improve if I opened more credit accounts. But then actually use them and watch your credit score drop.
Even if you accept that they are the wise all knowing Wall Street banks that are NEVER wrong, the 67 point plunge in the first half of this year is EXCESSIVE for someone that has never been late and always pays way more than mins.
As to how MUCH comes in, these scores are supposed to be about credit QUALITY not income QUANTITY. And just because my income is fixed does not mean it is poverty or inadequate.
Yeah, this is a typical issue….it happens to me every time I add a property to my investment portfolio. But be advised that someone like yourself will bounce back quickly in the current environment……as others have trouble making their debt service. My own credit score is up about 50 points since the pandemic began, simply because I haven’t been late on any payments……no change at all to my debt load.
My perspective on real estate is colored by my location….the market has heated up here as certain areas elsewhere become less attractive.
I would say that in this coming deflationary period not all markets will tank. There will be winners and losers. The key to financial survival in my view is to keep leverage very light in these troubled times.
Don’t like their stupid game? Don’t play. Borrowing only feeds that beast.
Thank you for the vastly most helpful advice Zardoz, just one problem, if you can restrict your purchases to red beans and rice you do not need credit to live in the modern world. So, if your house is paid for, your car is paid for, and you know for a fact you will never need any sum greater than what you have in a coffee can somewhere, then your advice is absolutely true. Otherwise you have no choice but to play the game. Realistic answers are always better than righteously indignant answers.
I don’t buy anything I can’t pay for fully at the time of purchase. I have an excellent credit rating and don’t need it or care what it is.
Yeah, well congratulations on being in the 1%. Inherited?
Remember your credit score is just how much debt they can sell you. Good credit is ability to pay cash for things you need.
RBM, then why when my income is stable and cannot go down by law did my credit score take a 67 point dump in the first half of this year?
Because you are using too much of your credit limit. Add up the limit of all your cards. What percentage of that amount have you already used?
Either pay down more of the balance, or get another credit card to increase your limit.
You are missing my point, credit scoring is not (or should not be) an ABSOLUTE value but a score of how you manage your money RELATIVE to other people. So while millions and MILLIONS of people have not paid rent (about 40% of all renters are behind) and at leat 10% of mortgages have serious delinquencies, as well as most of those people maxing out credit or worse, not even paying on cards, cars, and other debt, my only sin was to increase my credit usage, and mind you my total credit limit is not even all that high because I did not feel the need to have more than two cards. So why has MY score gone down the same amount as a household that is behind on all their bills and in serious danger of BK?
Nah, it is a scam because the lower your score the higher your interest rates on your debts. They are essentially downgrading everyone they can legally get away with to maximise the rate theft and it is up to government to REGULATE unfair credit practices because by god private banksters will never control their greed.
Donald Trump’s “greatest economy ever” produced such little prosperity. Amazing how many people who hate the swamp have become dependent on swampy big government to bail them out of the debt they were encouraged to take on to create this illusion of “greatest economy ever”. They don’t seem to mind the redistribution of wealth and socialist policies as long as the orange man giveth. Had it been Bernie writing the checks…
This whole thread is a perfect example of what’s wrong on both sides of the political spectrum:
Half truths with unfair characterizations thrown at both sides from the other.
Even the fact there are “sides” is problematic in itself. The best solution is a divorce IMO, a la a return to state sovereignty with the according decentralization of power so individual states can reflect the moral and economic values of it’s citizens without forcing it’s views wholesale on the whole country. Then at least people have the option to more easily move to a place better reflecting their personal philosophy. Alas….I don’t think it’s in the cards until things get really bad.
There’s also the issue of whether people moving out of CA/NY to places like TX or other spots will consider what policies caused them to move in first place. Will they change their voting habits in their new home….or are they simply locusts moving on to new fields to consume?
The swamp wasn’t drained — it expanded https://thehill.com/opinion/campaign/512676-the-swamp-wasnt-drained-it-expanded