New data show improving yet sustained housing insecurity risks

By Kristin Wong – JUN 22, 2021

In March 2021, we released an initial report on the effects of the COVID-19 pandemic on housing insecurity . We continue to monitor the market to assess new and developing risks to consumers, and we share updated charts from the report below that show an improving economic picture, yet sustained housing insecurity risks.

As of June 2021, 600,000 fewer consumers were in mortgage forbearance than in January 2021. Forbearance rates noticeably dropped in April when many borrowers exited forbearance after reaching 12-months. This was a positive sign, as many of these borrowers would have been eligible for additional extensions of up to 18 months of total forbearance. A payment deferral, or partial claim, was the most common repayment option. Additionally, foreclosure rates remain at historic lows—as of Q1 2021, 0.54 percent of mortgages were in foreclosure. Since the start of the pandemic, the CARES Act and guidance from the GSEs, FHA, VA, and USDA have prohibited lenders and servicers of GSE and federally-backed loans from beginning or proceeding with foreclosures.

On the other hand, the number of seriously delinquent mortgage borrowers remains nearly three times higher than before the pandemic, with 1.9 million mortgage borrowers more than three months behind on mortgage payments or in active foreclosure. More than one in 10 borrowers with an FHA loan remain seriously delinquent on their mortgage, a rate higher than the peak during the Great Recession. Of the borrowers still in forbearance, many may face a precarious financial situation upon exiting. According to a report from industry , nearly half have been in forbearance for over a year, and another report from industry found that the total amount owed by borrowers in forbearance is almost $90 billion. Employment has begun to trend in a positive direction; however, employment in the leisure and hospitality sector remains 15% below pre-pandemic levels, and the Black-White unemployment gap has increased since December 2020. Our research found that, during the pandemic, mortgage forbearance and delinquency have been significantly more common in communities of color and lower-income communities.

For a more detailed look at the data, please see the charts below:

Updated housing insecurity data

The economy

Figure 1: Percentage change in employment since January 2020 by sector, January 2020 – May 2021

This figure shows the percentage change in employment since January 2020 for the leisure and hospitality, retail trade, construction, government, and health services industries in a line graph. Each industry is a line. Each industry line starts at 0% in January 2020, remains relatively stable through March, and drops in April 2020. The industry with the largest percentage difference is leisure and hospitality (48%), the others drop no more than 15%. The lines bounce back up by June 2020, but they are not fully at 0%. Leisure and hospitality remains around 20% lower than 2019, the other industries are about 2 to 5% lower than 2019.

Notes: This chart shows a sample group of employment sectors
Source: CFPB analysis of Bureau of Labor Statistics data

Figure 2: Unemployment by race and ethnicity, January 2020 – May 2021

This figure is a line graph that has a line for each race/ethnicity shown—white, Black, Hispanic, and Asian. The white unemployment rate starts at 3.1% in January 2020, peaks at 14.2% in April 2020, and ends at 5.1% in May 2021. The Black unemployment rate starts at 6.0% in January 2020, peaks at 16.7% in April 2020, and ends at 9.1% in May 2021. The Hispanic unemployment rate starts at 4.3% in January 2020, peaks at 18.9% in April 2020, and ends at 7.3% in May 2021. The Asian unemployment rate starts at 3.0% in January 2020, peaks at 15.0% in May 2020, and ends at 5.5% in May 2021.

Source: Federal Reserve Bank of St. Louis

Mortgage delinquencies and foreclosures

Figure 3: Mortgage delinquencies comparison by month

December 2019, 30-60 day delinquencies, 1,376K. December 2020, 30-60 day delinquencies, 1,105K. April 2021, 30-60 day delinquencies, 732K. December 2019, 90+ day delinquencies, 427K. December 2020, 90+ day delinquencies, 2,146K. April 2021, 90+ day delinquencies, 1,768K. December 2019, Active foreclosures, 245K. December 2020, Active foreclosures, 178K. April 2021, Active foreclosures, 153K.

Source: Black Knight Mortgage Monitor, April 2021

Figure 4: Serious mortgage delinquency rate by loan type, Q1 2005 – Q1 2021

This figure is a line graph that has two lines. One line shows the serious mortgage delinquency rate for FHA loans and the other for all mortgage loans. The FHA rate starts at around 5% in 2005, peaks at 9.4% in 2009. It declines from 2012 to Q1 2020 until it reaches 3%. It then spikes to 10.8% in Q3 2020 and is 11.0% in Q1 2021. The line for all mortgage loans starts around 2% in 2005, peaks at 9.4% in 2009, and from there declines to 2% in Q1 2020. It spikes to 5.2% in Q3 2020 and is 4.7% in Q1 2021.

Notes: Not seasonally adjusted, serious mortgage delinquency includes loans 90+ days delinquent and loans in foreclosure
Source: Mortgage Bankers Association, National Delinquency Survey, Q1 2021

Figure 5: Mortgage loans in foreclosure and foreclosure starts, Q1 2005 – Q1 2021

This figure is a line graph that shows the rates of foreclosure starts and loans in foreclosure. The line for foreclosure starts stays below the line for loans in foreclosure from Q1 2005 through Q1 2021. The line for loans in foreclosure remains around 1.0% since Q1 2005, increases from 2008 to 2011 until it reaches almost 5.0%, and gradually drops after 2011. The line for foreclosure starts begins around 0.5% in Q1 2005, slightly increases to around 1.0%, and gradually drops after 2011. As of Q1 2021, the rate of loans in foreclosure is 0.54% and the rate of foreclosure starts is 0.04%.

Notes: Not seasonally adjusted
Source: Mortgage Bankers Association, National Delinquency Survey, Q1 2021

Mortgage forbearance

Table 1: Mortgage loans in forbearance by loan type, June 2021

Metric	Fannie & Freddie	FHA & VA	Other**	Total
Loans in forbearance*	656,000	859,000	609,000	2,124,000
UPB of Loans in Forbearance ($Bil)*	$136	$146	$135	$417
Share of Loans in Forbearance*	2.4%	7.1%	4.7%	4.0%
Active Loan Count (Mil)*	27.9	12.1	13.0	53.0

Notes: *Figures in this table are based on observations from Black Knight’s McDash Flash data set and are extrapolated to estimate the full mortgage market; **Other category includes held in portfolios, private labeled securities, or by other entities
Source: Black Knight Blog, June 2021

Figure 6: Monthly forbearance exits by reason, September 2020 – April 2021

This figure shows eight categories of forbearance exits: cancel/stay current without loss mitigation; reinstatement; payment deferral/partial claim; modification or combo; cancel/not current/no loss mitigation in place; loan paid off; repayment plan; other: short sale, died in lieu, etc. The figure shows the share of exits that went to each category out of 100%. The time period is from September 2020 to April 2021, and there is an 100% bar for each month. The share of exits that were cancel/stay current declines from 28% in June 2020 to 13% in April 2021. The share of reinstatements decreases from 13% to 11%. The share of payment deferral/partial claim increases from 29% to 34%. The share of modification or combo exits increases from 6% to 14%. The share of cancel/not current/no loss mitigation in place exits increases from 16% to 20%. The share of loan paid off exits fluctuates between 7% and 10% during the eight months. The share of exits that are repayment plans fluctuates between 0% and 2%. The share of exits that are “other: short sale, died in lieu, etc.” fluctuate between 0% and 1%.

Source: Mortgage Bankers Association Weekly Forbearance and Call Volume Survey, May 2021