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Foreclosure Starts Dip Despite End Of Federal Moratoria

David Krechevsky
Oct 22, 2021

Delinquency rate falls below 4% for first time since start of pandemic.

KEY TAKEAWAYS
  • With nearly 400,000 mortgage holders exiting forbearance plans in the first two weeks of October, Black Knight said it's essential to track foreclosure metrics closely in the coming months..

The national mortgage delinquency rate fell again in September to 3.91%, the first time it’s been below 4% since the start of the COVID-19 pandemic, according to the first look at the data by Black Knight.

The decline came despite the fact that national moratoria prohibiting foreclosures ended in July.

The 3.91% rate marks a 2.3% decline from August and 41.3% from the same time last year. Delinquencies have now improved in 14 of the last 16 months, Black Knight said.

The company, which tracks real estate data nationwide, said the improvement would have been even stronger but was partially offset by delinquencies increasing by 7,800 in FEMA-declared disaster areas in hurricane-impacted Louisiana, and by 11,000 in the state as a whole.

Foreclosure starts also dipped in September, after rising in August in the wake of the end of the federal foreclosure moratoria. September saw 3,900 foreclosure starts, the third-lowest monthly total on record and within 6% of the record low set in April of this year.

The number of active foreclosures fell byu 7,000 in September, hitting yet another all-time low. However, Black Knight said that with nearly 400,000 mortgage holders having exited forbearance plans in just the first two weeks of October alone, it will be essential to track foreclosure metrics closely in the coming months.

Approximately 1.2 million homeowners remain 90 or more days past due on their mortgages, but are not yet in foreclosure, including those who are still in active forbearance plans, the company said.

The states with the highest percentage of non-current loans, which combine foreclosures and delinquencies as a percent of active loans in that state, are Louisiana at 8.93%, Mississippi at 7.65%, West Virginia at 5.78%, Oklahoma at 5.76%, and Alabama at 5.57%.

The states with the lowest percentage of non-current loans are Idaho at 2.1%, Colorado at 2.37%, Washington at 2.38%, Utah at 2.5%, and Montana at 2.64%.

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