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Mortgage delinquency rate falls below 6 percent for the first time in a year

But an industry report says that may hide the economic damage caused by the pandemic

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Photo (c) krisanapong detraphiphat - Getty Images
Homeowners struggling financially during the coronavirus (COVID-19) pandemic are doing a better job of paying their mortgage on time. Black Knight, a housing data firm, reports that the  national mortgage delinquency rate fell to 5.9 percent in January.

The company says that number is significant because it’s the first time it has fallen below 6 percent since March, just as the pandemic was beginning in the U.S. For most consumers, their rent or mortgage is their largest recurring monthly expense. Economists say a decline in mortgage delinquencies is almost always a good sign for the economy as a whole.

Still, the numbers are much higher than before COVID-19 shut down the economy and threw millions of Americans out of work. Black Knight reports that around 2.1 million homeowners remain 90 or more days past due on their housing payments, but they are not yet in foreclosure. That’s five times higher than pre-pandemic levels.

The report shows that 130,000 properties were 30 days or more late on a mortgage payment but not yet in foreclosure as of early January. That’s 121,000 fewer than in December but 1.4 million more than in January 2020.

Mississippi leads the nation with 10.32 percent of its homeowners delinquent on their mortgage payments. Louisiana is second at 9.9 percent, and Hawaii is third at 8.99 percent. Idaho has the smallest percentage of delinquent mortgages at 3.18 percent, followed by Washington at 3.71 percent and Colorado at 3.75 percent.

Numbers may not reflect the true pain

The numbers, however, may not reflect the true economic disruption some homeowners are feeling. As part of the CARES Act early in the pandemic, Congress placed a moratorium on foreclosures on government-backed mortgages. Last week, the Biden administration extended the moratorium through June.

Homeowners who are in financial difficulty because of the pandemic may enroll in a mortgage forbearance program, with deferred payments added to the end of the loan. While that may provide short-term relief, Black Knight says it may have the effect of extending the length of the recovery period

Black Knight’s report estimates that 1.8 million mortgages will still be “seriously delinquent” at the end of June when foreclosure moratoriums on government-backed loans are scheduled to lift.

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