Black Knight: Delinquencies Edge Closer to Pre-Pandemic Levels

The national mortgage delinquency rate fell 5% by the end of July to 4.14%, edging closer to pre-pandemic levels, according to a preliminary report by Black Knight.

The software, data, and analytics company said it’s "first look" at July 2021 month-end mortgage performance statistics, which are derived from its loan-level database representing the majority of the national mortgage market, showed that some 1.45 million borrowers remained 90 or more days past due —but were not yet in foreclosure — as August began. That’s more than 1 million more borrowers than at the onset of the pandemic in 2020.

However, Black Knight said delinquencies have now improved in 12 of the past 14 months, with the two monthly increases being calendar-related and not indicative of worsening performance. Still, the number of serious delinquencies were significantly elevated as federal foreclosure moratoria expired at the end of July.

Foreclosure starts remained muted in July, falling 58% from the same time last year, Black Knight said.

The number of loans in active foreclosure also fell by 5,000 to yet another record low, but potential foreclosure activity in the coming months warrants close observation, the company said.

After rising in June, prepayment activity slid by 11% in July, but low 30-year rates in recent weeks have resulted in a modest resurgence in refinance incentive, which may impact August prepay numbers, the company said.

Some key takeaways from the report:

• The total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure) was 4.14%, down 5.22% from June and down 40.06% from July 2020.
• The total U.S. foreclosure pre-sale inventory rate was 0.26%, down nearly 4% from June and down nearly 26% from July 2020.
• U.S. foreclosure starts totaled 4,200, down 4.55% from a month earlier but down 57.6% from July 2020.
• The monthly prepayment rate (SMM) in July  was 2.04%, down 10.7% from June and down 25.4% from July 2020.
• The number of properties 30 or more days past due, but not in foreclosure, in July was 2.2 million, down 114,000 from June and down nearly 1.5 million from July 2020.
• The number of properties 90 or more days past due, but not in foreclosure, in July was 1.45 million, down 103,000 from June and down 803,000 from July 2020.

To read more about the Black Knight report, click here.