The latest report from the Mortgage Bankers Association (MBA) indicates that mortgage delinquency rates improved across all loan types in the second quarter of 2020. This is driven by the fact that homeowners have saved up more money since the beginning of the pandemic, and lenders have reported an increase in borrower repayment efforts. In general, delinquencies for both purchase and refinance loans continue to remain below levels seen in 2019.

MBA’s National Delinquency Survey found that the delinquency rate for all mortgage loans dropped from 4.84% in the first quarter of 2020 to 4.39% in the second quarter. The share of loans in forbearance also declined sharply during this period – from 8.25% in the first quarter to 5.25% in the second quarter. The share of loans in delinquency with payments more than 90 days past due also decreased significantly during the same period, falling to 2.79%.

Within the different loan types, considerable improvements were also seen. For example, the delinquency rate for conventional loans fell from 3.02% in Q1 to 2.48% in Q2. Similarly, the delinquency rate for FHA loans dropped from 7.73% to 5.14%, and the rate for VA loans declined from 4.03% to 3.37%. The report also noted that delinquency rates for all loan types returned to pre-COVID levels or were even lower, indicating the resilience of the mortgage market.

On the other end of the spectrum, mortgage performance in the hard-hit states of New York, New Jersey and Connecticut stood out. The delinquency rate for loans from these states, which had remained at a higher level for the past 6 months, decreased for the first time since the start beginning of the pandemic in March. This decrease was mainly driven by the injection of government assistance and forbearance programs in these states, along with an increase in workout options.

Overall, the report from the MBA is positive news for the continued stability of the mortgage market. Despite the harsh economic conditions surrounding the pandemic, mortgage delinquencies continue to improve across all loan types. This is especially true in the states hardest hit by the pandemic, where government assistance and other forbearance programs have likely enabled borrowers to become current on their mortgage payments.

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