Mortgage delinquencies rise in first quarter, with Florida a hotspot

One economist said the state’s faulty unemployment system could be a “big factor” contributing to the state’s ranking.
A sign at the front door of this home for sale in Palm Harbor asks potential buyers to remove shoes and disinfect while viewing the home.
A sign at the front door of this home for sale in Palm Harbor asks potential buyers to remove shoes and disinfect while viewing the home. [ CHRIS URSO | Times ]
Published May 12, 2020|Updated May 12, 2020

The number of people who were unable to make payments on their mortgages during the first quarter of 2020 is up nationwide, according to a survey of about 38 million loans by the Mortgage Bankers Association.

The mortgage delinquency rate rose by 0.59 percent — a spike reminiscent of the third quarter of 2017, after the country was bludgeoned by back-to-back hurricanes Harvey, Irma and Maria and the delinquency rate increased by 0.64 percent.

"The mortgage delinquency rate in the fourth quarter of 2019 was at its lowest rate since MBA's survey began in 1979," said Marina Walsh, the association's vice president of industry analysis in a news release. "Fast-forward to the end of March, and it is clear the COVID-19 pandemic is impacting homeowners."

The first quarter covers January through March. Walsh noted that she expects the increase to continue into the second quarter.

Florida saw the third-highest increase in its delinquency rate for the past 30 days, after New York and Alaska, according to the survey.

Scott Brown, senior economist at St. Petersburg-based Raymond James, an investment bank, said Florida’s faulty unemployment system could be a "big factor” contributing to Floridians’ difficulties paying their mortgage. The website has been so problematic that the state turned to paper applications, and Gov. Ron DeSantis has launched an investigation into how the $77 million contract to construct the system was awarded.

Included in the delinquency figures are people who entered into forbearance agreements, which allow homeowners to work with their lenders to delay mortgage payments without immediately risking foreclosure.

Still, the survey represents a sign of financial strife among homeowners, and not just renters, because of the pandemic and its corresponding spike in unemployment.

Brown said that a rise in delinquencies is often an indicator of foreclosures coming down the line.

But there are several reasons a wave of eventual foreclosures could be mitigated. While Florida’s moratorium on evictions and foreclosures is set to expire after May 17, the CARES Act passed by Congress includes longer-running protections for properties with federally backed mortgages.

Another major source of optimism for Florida’s housing market is that while the number of home sales has started to decline during the pandemic, home prices are holding steady in the Tampa Bay area. They even increased in the first quarter for Florida as a whole. That means that unlike the previous financial crisis, homes aren’t losing their value, which caused many people to walk away from their houses facing foreclosure after 2008.

All in all, considering the unemployment figures released so far, the mortgage delinquency rate is lower than “one might have feared,” Brown said.

The question is whether more cases of COVID-19 will arise as the state reopens, which could deal a second, more lasting blow to the economy, he added.

“At best it’s going to be a gradual process, but it has the potential to be a pretty bumpy road.”

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