Mortgage Delinquencies Fall to 18-Month Low as More Americans Pay Bills on Time

Mortgage delinquencies fell to an 18-month low in September as more Americans paid their bills on time, including homeowners exiting forbearance plans, Black Knight said in a report on Monday.

The share of mortgages late by 30 days or more in September fell to 3.91%, almost half the level of a year ago. The delinquency tally includes all late payments, even those from borrowers who have received permission to suspend payments as part of a forbearance plan.

“What would have been stronger improvement was partially offset by delinquencies rising by 7,800 in FEMA-declared disaster areas in hurricane-impacted Louisiana and by 11,000 in the state as a whole,” Black Knight said in a statement, referring to the Federal Emergency Management Agency declaration after Hurricane Ida made landfall on Aug. 29.

Nationally, foreclosure starts also dipped in September after spiking in August following the expiration of the federal foreclosure moratorium put in place at the start of the Covid-19 pandemic. The number of active foreclosures, measuring properties in all stages of foreclosure, fell to an all-time low in September, Black Knight said.

About 432,000 homeowners left Covid-19-related mortgage forbearance plans in the first 19 days of October, making it the largest month in terms of exit volume in a year, Black Knight said in a separate report on Friday.

That left 1.24 million mortgage holders in forbearance plans, representing 2.3% of all active mortgages, the lowest since the beginning of the pandemic, the report said.

Borrowers were allowed to pause mortgage payments during the Covid-19 pandemic as part of the CARES Act passed by Congress in March 2020. The provisions were aimed at preventing the massive displacements that occurred after the 2008 financial crisis when more than 10 million American families lost homes through legal seizures or forced sales.

Louisiana had the highest number of delinquencies in September, at 8.93%, the Black Knight report said. Mississippi was second-worst, at 7.65%, followed by West Virginia, at 5.78%, Oklahoma, at 5.76%, and Alabama, at 5.57%.

Many of those states saw their hospital ICUs overrun with Covid-19 patients last month as the Delta variant of the coronavirus tore through the U.S. states with the lowest vaccination rates.