Mortgage delinquencies decline in third quarter, but Florida is an outlier

The percentage of Federal Housing Administration loans deemed “seriously delinquent” reached an all-time high since at least 1979.
A for sale sign stands in front of a house, Tuesday, Oct. 6, 2020.
A for sale sign stands in front of a house, Tuesday, Oct. 6, 2020. [ STEVEN SENNE | AP ]
Published Nov. 10, 2020

The third quarter of 2020 brought good and bad news when it comes to who could afford to pay their mortgages on time as the coronavirus pandemic maintained its hold on the United States.

Overall, the national mortgage delinquency rate decreased from the second quarter by a little more than half a percentage point to 7.65 percent of all outstanding loans, or roughly 2.98 million mortgages, according to new numbers released Tuesday by the Mortgage Bankers Association. The association arrived at these figures by surveying about 39 million loans on one- to four-unit residential properties.

The mortgage delinquency rate was about 3.68 percentage points higher than the third quarter of 2019.

“Consistent with the improving labor market and the overall economic rebound, homeowners' ability to make their mortgage payments improved in the third quarter,” Marina Walsh, the association’s vice president of industry analysis, said in a statement.

Pressure points continue to emerge. While the percentage of loans that were past due dropped for loans that have become delinquent in the past 30 or 60 days, the 90-day delinquency rate increased to its highest point since the second quarter of 2010.

The association’s survey categorizes a loan as delinquent even if the borrower has a forbearance agreement with their bank to avoid the risk of foreclosure, so it’s likely homeowners “experiencing longer-term distress” will remain delinquent until a final “loss mitigation resolution is available,” Walsh said.

Additionally, homeowners with Federal Housing Administration loans, meant for first-time or lower-income buyers, as well as Veterans Administration loans, are still showing that they’ve been more heavily impacted by the coronavirus pandemic than those with conventional loans. The delinquency rate for Veterans Administration loans increased in the third quarter to 8.16 percent, while the Federal Housing Administration loan delinquency rate decreased slightly but remained high at 15.59 percent.

The rate for Federal Housing Administration loans that were considered “seriously delinquent” — at least 90 days past due or in the process of foreclosure — reached its highest rate since at least 1979.

Florida continued to rank high for its delinquency rate, with the fourth-largest increase from the same time last year: 5.02 percentage points, to arrive at 15.19 percent of loans past due. Nevada came in at No. 1, followed by New Jersey and Hawaii. However, Florida also saw one of the largest decreases in past-due mortgages compared to the second quarter of 2020, meaning that it is headed in a positive direction.

The fact that both Nevada and Hawaii were included near the top led Richard Buttimer, dean of the University of North Florida’s Coggin College of Business, to suspect a loss of tourism as a culprit for Floridians' difficulties.

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“A lot of homes in Florida are rental homes and with the decline in tourists because of the pandemic, my guess is some of those folks are stressed,” he said.