The analysis looked at more than 28 million mortgages held by Fannie Mae and Freddie Mac, and found that 0.96% of these mortgages were delinquent in the three-month period ending in September. This marked an increase from 0.89% in the previous quarter and 0.84% a year ago.
The rise in the delinquency rate was driven primarily by new cases of distress, as there was a significant uptick in the number of borrowers entering forbearance plans. Borrowers who sought relief under federally mandated forbearance plans accounted for 19.6% of all delinquent loans in the third quarter of 2020, up from 15.8% in the second quarter. This was due to the two-month extension of plan eligibility granted by the federal government earlier in the year.
The FHFA data also showed that between July and September, there were 748,000 newly delinquent loans. Of these, 567,000, or about 75%, were in forbearance plans. This is evidence of the continued fragility of the national housing market since the onset of the pandemic.
However, the overall delinquency rate remains far lower than it was during the housing crisis of a decade ago. In 2010, the overall delinquency rate was 6.4%, or seven times higher than the current rate. Furthermore, the FHFA noted that there has been an improvement in the performance of mortgages made before 2009, indicating that the market is beginning to recover.
Overall, the latest data from the FHFA shows that while the national delinquency rate is on the rise, the increase is being driven mainly by borrowers seeking relief through federally mandated forbearance plans. This suggests that the housing market remains fragile and vulnerable to further economic disruption caused by the pandemic. However, the data also indicates that the market is slowly recovering and is still far healthier than it was during the housing crisis of a decade ago.
The Federal Housing Finance Agency (FHFA) released new data showing that the national delinquency rate for mortgages increased slightly in the third quarter of 2020. The analysis, which includes more than 28 million mortgages held by Fannie Mae and Freddie Mac, revealed that 0.96% of these mortgages were delinquent, up from 0.89% in the second quarter and 0.84% a year ago.
The main cause of the increase was new cases of distress, with borrowers seeking relief through federally mandated forbearance plans accounting for 19.6% of all delinquent loans in the third quarter. Between July and September, there were 748,000 newly delinquent loans, of which 75% were in forbearance plans. This suggests that the housing market is still fragile and vulnerable due to the pandemic, but is beginning to recover.
In 2010, the overall delinquency rate was 6.4%, which is significantly higher than the current rate. This indicates that the market is much healthier now than it was during the previous recession. The FHFA also noted that there has been an improvement in the performance of mortgages made before 2009, providing further evidence of the market’s recovery.
Overall, the data from the FHFA indicates that the national delinquency rate for mortgages has increased slightly in the third quarter of 2020. Most of this increase is due to borrowers seeking relief through federally mandated forbearance plans, and the market remains vulnerable to further disruptions caused by the pandemic. However, the data also shows that the market is slowly recovering and is much healthier than it was during the previous recession.
This article was contributed on Sep 21, 2023
