When unemployment spiked, the Federal Housing Finance Agency put forth measures such as yearlong mortgage forbearance and a moratorium on foreclosures for federally backed mortgages to keep citizens housed. But the moratorium will expire August 31, and mortgage delinquency rates have only gone up, according to Curbed. For comparison, delinquencies peaked during the 2008 Great Recession at 10.57%. May’s mortgage delinquency rate shot up to 7.76% from January’s 3.22%. Curbed says this is much like water building up behind a dam, and the government needs to be cautious.
Prior to the the pandemic in March, the number of mortgages in forbearance was fewer than 100,000. Currently, there are roughly 4.5 million mortgages in forbearance, although this is obviously a reflection of homeowners having the option of forbearance, but it gives you a sense of the scope.
Not every homeowner in forbearance is past due on their payments; some went into forbearance as a precaution, or just because they could. Some homeowners were in forbearance and have since gotten out, either because there didn’t end up being a need or they got a new job. For June, 21 percent of mortgages in forbearance were current on their payments, but as the pandemic goes on, more will enter into serious delinquency that would normally trigger a foreclosure.