Mortgage delinquency rate hits 21-year high
The percentage of homeowners who were four months behind their mortgage payments hit a 21-year high in July. This comes from the latest numbers from CoreLogic, a financial data and analytics company.
The 120-day crime rate was 1.4%, up from 0.12% in July 2019 and the highest since CoreLogic began prosecuting crime in 1999. The rate includes homeowners who have given leniency under the CARES Act to have.
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"What we are seeing is a 'pig in python' effect with an increase in June for 90-day failures and now in July for 120-day failures," said Dr. Frank Nothaft, Chief Economist at CoreLogic. "I think it's a big problem, especially as the CARES law was lenient, but homeowners still owe every payment."
The 120-day crime rate was 1.4% from 0.12% in July 2019, the highest since CoreLogic began prosecuting crime in 1999. (Photo: Getty Creative)
"We will see 2 million loans severely criminal in 2021."
The other findings of the report also show the severity of the money crisis.
The mortgage overdue rate of at least 90 days rose from 1.3% in the same month last year to 4.1%, the highest level since April 2014. All 50 states saw an increase in seriously criminal mortgages marked by payments of 90 or 90 more days too late. But some bore the brunt more than others.
According to CoreLogic, all 50 states saw an increase in seriously criminal mortgages in July. (Image credit: CoreLogic)
In New York this rate rose to 10% in July from 4.3% in the previous year. The rate in New Jersey reached 9.6% compared to 4.5%, while the Florida crime rate rose to 8.6% from 4.1% in July last year.
"If the financial burden continues, we can see at least 2 million loans seriously in default by the end of 2021," Nothaft said.
"Additional fiscal incentives will likely be needed"
With the next round of Democratic-White House stimulus talks - including additional unemployment benefits and direct payments - unresolved, many Americans will be forced to stretch their dollars as much as possible.
Those who have chosen forbearance offered by state-sponsored mortgage guarantors still have the prospect of repaying months of overdue mortgage payments when the mortgage lending period ends.
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"While increased savings can help households meet their payment obligations in the short term, additional fiscal incentives are likely to be needed to help households fill the gap until the labor market fully recovers," said Rhea Thomas, senior economist at Wilmington Trust, a financial firm for festivals.
A more resilient job recovery is also needed to help American homeowners stay afloat. The unemployment rate is still high at 7.9%, with weekly unemployment claims still at a high level.
"The employment level is only about half of what it was before COVID," said Thomas. "Further job and income recovery will help households meet payment obligations."
Dhara is a reporter for Yahoo Money and Cashay. Follow her on Twitter at @Dsinghx.
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