Foreclosure starts low, but anxieties high as coronavirus looms

While the mortgage market began the year healthy, lenders and borrowers need to prepare for the impacts of the coming coronavirus recession.

While the mortgage market began the year healthy, lenders and borrowers need to prepare for the impacts of the coming coronavirus recession.

Last month, foreclosure starts fell to the lowest level ever recorded, according to Black Knight. A total of 32,300 foreclosure starts took place in February, down 24.5% month-over-month and 20% from the year before.

NMN03232020-LendingTree.png

The delinquency rate — based on those at least 30 days late on their payment, but not yet in foreclosure — went to 3.28%, inching up from a record low in January, but dropping 15.6% year-over-year. Overall, 1.74 million properties had delinquent loans in February.

As refinances skyrocketed with falling interest rates, February's monthly prepayment rate rose to 1.35%, representing jumps of 7.8% month-to-month and 106.6% year-to-year. March numbers could be indicative of the coronavirus impact.

After health concerns related to the pandemic, consumers worry most about their bill-paying capacity, according to a recent LendingTree survey of 1,050 people. Of those anxious about bills, the largest group, totaling 44%, listed rent or mortgage payments as their primary concern. Credit cards, insurance premiums and student loans were next at 23%, 15% and 8%, respectively.

CORONAVIRUS IMPACT: ADDITIONAL COVERAGE
mcconnell-mitch-masked-senate.jpg
By Erik Wasson and Laura Litvan
July 27, 2020 5:56 PM

Senate Republicans presented a series of bills that would trim unemployment benefits, send $1,200 to most Americans, and shield businesses, schools and other organizations from coronavirus lawsuits.

3 Min Read
AT-072720-LeaseTransitionEffortChart.png
Michael Cohn
July 27, 2020 5:00 PM

More than half the companies that completed their first audits under the new standard needed to make an extra effort.

6 Min Read
Hantz Fevry, founder and CEO, Stoovo
Penny Crosman
July 27, 2020 2:34 PM

Current, Stoovo and other companies are reaching out with low-cost, low-fee financial services and even tools to help users search for part-time jobs.

9 Min Read

"The changes in consumer behavior will likely lead the U.S. into recession," Tendayi Kapfidze, chief economist at LendingTree, said in a press release. "After an initial boost in consumption due to preparation, spending is set to contract sharply as broad sectors of the consumer economy shut down. Mortgage borrowers can get a break on making their payments via a process known as forbearance."

Advertisement

Fannie Mae and Freddie Mac already announced their plans to suspend foreclosures for at least 60 days, setting a precedent for other lenders during the crisis. Actions will need to be taken to keep borrowers out of delinquency while financial burdens add up.

LendingTree's survey showed 40% of consumers had negative impacts to their pay, through hour reductions, layoffs or missed tips and commissions. That share jumps to 63% when talking about other personal finances like stock losses and supply purchases.