Delinquency Rate Dropped 4.25% In October

The national delinquency rate continued to improve at a slow but steady pace last month, with especially impactful declines for loans overdue by 30 days or more, according to Black Knight’s October 2021 “first look” report.

Delinquencies dropped another 4.25% at the end of October to 3.74%. The decline was pushed by significant changes in longer delinquencies. Loans 30 or more days past due dropped by 82,000, bringing their total below 2 million for the first time since the beginning of the pandemic. 

Serious delinquencies also saw huge drops, declining by 10%, or 127,000 loans. Black Knight attributes that dip to the first wave of homeowners in forbearance beginning to make payments again. The report predicts more improvement in this category moving forward, as some homeowners exiting forbearance are still working through mitigation options with their servicers.

Foreclosure starts increased in October by 2.6%, up 4,000. However, that is 90% lower than 2019 levels and active foreclosure inventory remains near April 2021’s record low of 3,700.

Foreclosure rates have been closely monitored since predictions of a “forbearance tsunami” resulting from the expiration of COVID-era forbearance programs. But the wave has yet to materialize.

“The effects so far have been muted from the July 31 end-date of the foreclosure moratorium on federally-backed loans. The foreclosure starts rate matched an all-time survey low first reached in 2020, and the foreclosure inventory rate dropped again,” said Marina Walsh, CMB, Vice President of Industry Analysis at the Mortgage Bankers Association.

“Homeowners, investors, and servicers have better options than proceeding with a costly and time-consuming foreclosure process.”

Louisiana continues to top the list of states with the highest percentage of non-current loans, at 8.74%, followed by Mississippi (7.52%), West Virginia (5.76%), Oklahoma (5.64%), and Alabama (5.60%.)

The states with the lowest percentage of non-current loans were Utah and California (both 2.42%), Washington (2.31%), Colorado (2.30%), and Idaho (2.05%).

Black Knight’s October month-end mortgage performance data comes from its loan-level database, representing most of the national mortgage market.