According to a recent report by the Mortgage Bankers Association (MBA), the delinquency rate for mortgage loans rose to a seasonally adjusted 8.22% rate in the second quarter of 2020. The results marked the highest rate in nine years. The nearly 4% increase was also the highest spike from the previous quarter in the survey’s history. In addition, the survey indicated a record high delinquency rate for FHA mortgages, reserved for first-time homebuyers.
Some homeowners are having difficulty making their mortgage payments amid the COVID-19 pandemic. The report states that the mortgage delinquencies track closely with the availability of jobs. The five states with the largest rises in mortgage delinquency rates were those that have a large number of leisure and hospitality jobs, which were hit hardest by the pandemic: New Jersey, Nevada, New York, Florida, and Hawaii.
The pace of recovery in the US is affected by uncertainties including unemployment and stimulus measures, numbers in COVID-19 cases, and reopening. “Certain homeowners, particularly those with FHA loans, will continue to be impacted by this crisis, and delinquencies are likely to stay at elevated levels for the foreseeable future,” said Marina Walsh, MBA’s vice president of industry analysis.
However, Walsh continued, “Fortunately, there are several mitigating factors that make this current spike in mortgage delinquencies different from the Great Recession. These factors include home-price gains, several years of home equity accumulation, and the loan deferral and modification options that present alternatives to foreclosure for distressed homeowners.”