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The U.S. affordability crisis is continuing to take a toll on homeowners, an increasing share of whom are missing their mortgage payments.
In the fourth quarter, the share of delinquent mortgages ticked up 28 basis points year over year and 27 basis points quarter over quarter to reach 4.26 percent, according to the Mortgage Bankers Association. While more homeowners are falling behind on payments, the rate of loans starting the foreclosure process held relatively steady compared to the quarter and year before, at about 0.2 percent.
These delinquency rates are seasonally adjusted and include loans that are at least one payment past due; it excludes mortgages in the foreclosure process.
A larger share of mortgages are falling into later-stage delinquency, suggesting it has been getting harder for U.S. homeowners to catch up on payments quickly. Loans overdue by 60 days, which made up 0.92 percent of mortgages in the fourth quarter, rose 16 basis points year over year. Loans overdue by at least 90 days, 1.27 percent of loans, were up eight basis points year over year. Meanwhile, the share of loans just 30 days overdue had inched up just four basis points year over year.
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The Federal Housing Administration ended what was supposed to be temporary relief for some mortgage holders because of the pandemic, when many Americans lost jobs and struggled to pay the bills. While the increase in delinquencies were seen across loan types, FHA loans reported the highest year-over-year increase, of 49 basis points. Its fourth-quarter delinquency rate reached 11.52 percent, the highest since the second quarter of 2021.
“The fourth quarter results may have been impacted by the expiration of pandemic-era, FHA relief options as well as disparities in the labor market — a key determinant of mortgage delinquency levels,” said Marina Walsh, MBA’s vice president of industry analysis, in a statement.
Additionally, MBA noted that FHA loans that originated in 2022 and 2023, when mortgage rates increased, also are performing worse than those from 2020 and 2021.
All states saw a quarter-over-quarter rise in the share of loans that were more than 90 days delinquent, and all but two states — Idaho and North Dakota — also experienced increases in their 30-day delinquency rates, according to MBA’s state-level data, which is not seasonally adjusted and does not include loans that were 60 days delinquent.
Mississippi had the highest 90-day delinquency rate, of 2.66 percent, and the highest 30-day delinquency rate, of 3.98 percent. Both rates increased the most quarter over quarter in the country, by 26 basis points (90 days) and by 44 basis points (30 days).
Mississippi has the second-highest poverty rate, of 18 percent, in the country, after Louisiana, which followed Mississippi with the second-highest mortgage delinquency rates in the fourth quarter.
Louisiana and Mississippi in the fourth quarter also recorded the highest rates of mortgages that were considered “seriously underwater,” meaning homeowners owe at least 25 percent more than their properties’ estimated market value, according to data from Attom. Nationally, 3 percent of mortgages are seriously underwater, compared to 10.7 percent in Louisiana and 8.3 percent in Mississippi.