Last quarter, the United States suffered an unparalleled surge in mortgage delinquencies as foreclosures continued to increase and banks offered fewer and fewer mortgage loan modification opportunities. According to the Office of the Comptroller of the Currency, the number of struggling borrowers, behind on their payments, rose nearly 17 percent quarter-to-quarter.
What is Causing this Surge?
This shocking rise in mortgage delinquency has been attributed to a number of factors. While it can, in part, be explained by annual seasonal factors—a similar, lesser increase occurred last year at the same time—other more concerning causes must also be considered.
The nation’s high unemployment rate is a particularly influential factor affecting the state of mortgage delinquency in the United States. Indicators such as the high rate of new claims for unemployment insurance may also give a possible explanation for the rise.
Fears of what this surge in delinquency might mean for the country have only been compounded by the knowledge that mortgage loan modifications have fallen 18 percent quarter-to-quarter. Also notable is the 2.5 percent quarterly increase in borrowers who are at least 60 days late with their payments or are in bankruptcy. This is the first time the number of severely-delinquent homeowners has risen since 2009.
Home seizures and forfeitures have also increased this year, implying that mortgage servicers will most likely begin repossessing homes at higher rates. This follows a period of relative calm, when many major lenders were struggling to repair their systems after being criticized for using “robo-signing” methods to process foreclosures.