What Are 60-Plus Delinquencies?

The 60-plus delinquency rate is a metric typically used for the housing industry to measure the number of mortgage loans that are more than 60 days past due on their monthly payments. A 60-plus delinquency rate is often expressed as a percentage of a group of loans underwritten within a specified time period, such as one year.

Understanding 60-Plus Delinquencies

The 60-plus delinquency metric can also be used for auto loans and credit cards. The 60-plus delinquency rate is helpful because it shows creditors and lenders whether consumers are falling behind on their payments and if they’re likely to default on their loans.

Prime vs. Subprime Loans

The 60-plus rate may be split into prime loans and 澳洲幸运5官方开奖结果体彩网:subprime loans. Subprime loans are for borrowers with a poor credit history. The 60-plus delinquency rate on subprime loans is typically higher than for prime loans. Oftentimes, 60-plus rates are published separately for 澳洲幸运5官方开奖结果体彩网:fixed-rate loans versus 澳洲幸运5官方开奖结果体彩网:adjustable-rate loans, which have a variable rate and might have the option to reset to a fixed rate later in♛ the term.

Economic Impact

Monitoring the 60-day rates and other delinquency rates for borrowers can provide enormous insight into the financial health of consumers in an economy. If 澳洲幸运5官方开奖结果体彩网:economic conditions are favorable, meaning steady 澳洲幸运5官方开奖结果体彩网:economic growth, delinquency rates tend to fall.

Conversely, as economic conditions deteriorate, 澳洲幸运5官方开奖结果体彩网:unemployment tends to rise as consumers get laid off from their jobs. With less income, it becomes more difficult for consumers to make their mꦐortgage payments, leading to a spike in delinquencies throughout the economy. 

Also, banks and 澳洲幸运5官方开奖结果体彩网:mortgage lenders track delinquency rates since any interruption in mortgage payments represents a reduction in revenue. If delinquencies persist in a poorly performing economy, bank losses can rise as fewer mortgage payments are received, which leads to fewer new loans being issued. Fewer new loans to consumers and bus𒐪inesses can exacerbat꧟e the already poor economic conditions, making a recovery more challenging.

Investor Impact

Besides the impact on the 澳洲幸运5官方开奖结果体彩网:banking sector and the overall economy, investors with funds tied to the mortgage and real estate market can lose money when delinquencies rise. Mortgage loans are sometimes grouped into a pool of loans that make up 澳洲幸运5官方开奖结果体彩网:mortgage-backed securities (MBS). An MBS is sold to investors as a fund from which they earn interest from the underlying mortgage loans. Unfortunately, investors often have no idea whether the loans that comprise the MBS are current—meaning that the borrowers are not ဣbehind on their payments.

If the de🐓linquency rate on past-due mortgages rises beyond a certain level, the mortgage-backed security may experience a shortfall of cash, leading to difficulty making the interest payments to investors. As a result, a re-pricing of the loan assets can occur, resulting in some investors losing a portion or most of their invested capital.

60-Plus Delinquencies vs. Foreclosure

The 60-plus delinquency rate is often added to another negative event measure: the 澳洲幸运5官方开奖结果体彩网:foreclosure rate for the same group of loans. 🌠The two metrics provide a cumulative measure of the individual mortgages that are either not being paid or being paid 🎶behind schedule.

Since 60-plus delinquencies are less than 90 days, the loans have yet to enter the foreclosure process. Foreclosure is the legal process in which a bank seizes a home due to default or nonpayment of the mortgage payments by the borrower. Although each lender may differ, typically 90 to 120 days past due, a home loan enters the 澳洲幸运5官方开奖结果体彩网:pre-foreclosure process.

When a borrower is 90 days past due, the lender usually files a 澳洲幸运5官方开奖结果体彩网:notice of default, which is a public notice submitted to the local court stating that the borrower’s mortgage loan is in default. Borrowers can still try to work with their bank to modify the loan at this point in the prꦕocess.

If the loan payments are still not made beyond the 90- to 120-day period, the foreclosure process moves forward. The bank will eventually seize the home, and an auction will be held to sell the home to another buyer.

Options for Delinquent Mortgage Loans

When a borrower falls behind on their mortgage payment for 30 days or more, the loan is considered delinquent and gets reported to the 澳洲幸运5官方开奖结果体彩网:credit bureau. However, 澳洲幸运5官方开奖结果体彩网:mortgage lenders do not want borrowers to lose their home and may help delinquent borrowers by exploring 澳洲幸运5官方开奖结果体彩网:financial options to avoid foreclosure.

Mortgage Forbearance

澳洲幸运5官方开奖结果体彩网:Mortgage forbearance is when a mortgage lender and a borrower come to an agreement to help give the borrower relief from making the payments. For example, if a♔ borrower lost their job or their income decreased, the lender might agree to temporarily suspend or lower the monthly payments for a period of time. Following the forbearance period, the borrower would resume the payments once they got their financial situation in order.

If approved, forbearance will cause any of your skipped payments to be added to the end of the loan’s term, meaning that the length of the loan will increase. In other words, borrowers still need to make those payments, but instead of making the payments in the next few months, they get added to the end of the mortgage loan payment schedule.

Loan Modification

A 澳洲幸运5官方开奖结果体彩网:loan modification is another option for borrowers who are delinquent on their mortgage and it involves renegotiating the 澳洲幸运5官方开奖结果体彩网:loan terms so that the borrower can better afford the payments. A loan modification allows for changes to the financial details of the loan, including lowering t𒆙he interest rate, the monthly payment, or extending the loan term, which would decrease the monthly payments or provide more time to repay the loan.

For example, Fannie Mae offers a Flex Modification program, which allows for a 20% principal and interest reduction on the loan. Borrowers also have the option of extending the loan for 40 years.

Short Refinance

澳洲幸运5官方开奖结果体彩网:Short refinance is used when borrowers take out a new loan to replace the existing loan but at a lower balance. However, the 澳洲幸运5官方开奖结果体彩网:mortgage lender takes a loss on the difference and receives a lower payment. A short 澳洲幸运5官方开奖结果体彩网:refinance is usually the last step before foreclosure.

Example of 60-day Mortgage Delinquencies

The 澳洲幸运5官方开奖结果体彩网:Mortgage Bankers Association (MBA) tracks mortgage delinquency rates for the U.S. economy. The mortgage delinquency rate was 3.97% in the second quarter (Q2) of 2024, which was higher by .60% from one year earlier. From a historical perspective, the delinquency rate exceeded 8% during the COVID-19 pandemic. Mortgage loans backed by the 澳洲幸运5官方开🌠奖结果体彩网:Federal Housing Administration (FHA) had the highest delinquency rate in Q2 2024 at 10.60%.

The Bottom Line

A borrower is considered delinquent after 30 days past due on an account, and those behind in their monthly mortgage payment by 60 days or more are considered 60 days delinquent. Delinquencies get reported to credit agencies and negatively impact your credit score. If a 60-plus delinquency turns into 90 days, the lender may begin the foreclosure process in which the bank seizes a home due to default or nonpayment. If you fall behind in your mortgage payments, don't wait; 澳洲幸运5官方开奖结果体彩网:get help by contacting your lender or mortgage servicer.