The most recent mortgage delinquency information came in November 2020. Delinquencies fell to their lowest level since the start of the coronavirus pandemic, back in March 2020, though the number is still far higher than the rate a year earlier.
According to the latest reading by CoreLogic, just under 6% of all U.S. mortgages — 2.7 million homes — were in some stage of delinquency at the end of November.
The Most Recent Mortgage Delinquency Information
Dr. Frank Nothaft, Chief Economist at CoreLogic, said, “This was the highest rate in more than 21 years and double the December 2009 Great Recession peak.” The largest share of troubled mortgages are seriously delinquent or more than 90 days past due. And if trends continue, an estimated 2 million mortgage loans could become seriously delinquent in 2021
“The consistent decline in serious delinquency since August is a sign of growing financial stability for families,” said Frank Martell, president, and CEO of CoreLogic. While the decline is certainly positive, the pandemic-driven distress in the mortgage market is far from over. The share of loans in government or private-sector mortgage bailout programs now appears to be stuck in place.
“It’s Just So Much More Expensive to Serve a Delinquent Loan Than a Performing Loan.”
That quote is from the lending side. On delinquent loans, lenders have to reserve for loan losses. Loan loss reserves are accounting entries banks make to cover estimated losses on loans due to defaults and nonpayment.
Paul Tracy explains how this works at Investing Answers. “Let’s assume Bank XYZ has made $10,000,000 of loans to various companies and individuals. Though Bank XYZ works very hard to ensure that it lends only to people who can repay their loans (and repay them on time), inevitably, some will fall behind, some will be renegotiated, and even some will default, sold off as non-performing loans.”
“Bank XYZ knows this and estimates that 1% of its loans, or $100,000, will probably never come back to it. This $100,000 estimate is Bank XYZ’s loan loss reserve, and it records this reserve as a negative number on the asset portion of its balance sheet.”
Looking forward, an estimated 2 million mortgage loans could become seriously delinquent in 2021. For some borrowers, the reason they are delinquent is job loss. We pray every day that the economy picks up and people go back to work. For many, that will never happen. Those jobs are lost forever.
We have an opportunity to help the consumers stay in their homes. We can buy the non-performing loans at a deep discount from lenders, restructure the loans on better terms, and keep the borrowers in their homes. It is very satisfying work.
Paige Panzarello, the “Cashflow Chick,” Founder of The Tryllion Group, Investor/Entrepreneur having done $150 Million+ in real estate transactions; Specializing in Non-Performing Notes. She has been a regularly featured guest on “The Cashflow Guys” podcast, and you can also find her on many other Real Estate and Entrepreneurial podcasts and in the Wall Street Journal as well. She also speaks at various Real Estate Investing clubs and conferences across the country. Paige teaches the “Building Wealth with Notes” Workshop that drills down into the details of how to successfully buy Non-Performing Notes, create passive income, and mitigate risk. www.CashflowChick.com/training
Surviving the crash of 2007, Paige knows how “life happens” every day. Her passion is to help people build wealth, secure their financial future, enjoy life, and be ready-not broken! Whether it is improving communities one house at a time, assisting borrowers in staying in their homes, or working with other investors to learn a new way to earn higher investment dollars for their retirement years, Paige potentially dedicates herself and her business to helping people improve their lives in every way. For more information got to www.CashflowChick.com