With pandemic spreading pain unevenly, these 5 states hardest-hit by mortgage delinquencies

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Mortgage delinquencies soared as the coronavirus pandemic brought the U.S. economy to a standstill in April.

Fully 3.6 million homeowners were past due on their mortgages as of the end of April, the highest level since 2015, mortgage data firm Black Knight said Thursday. Nationally, the delinquency rate nearly doubled. In March, as the coronavirus began to affect the U.S. economy, just 3.39 percent of borrowers were behind. In April, when economic activity ground to a halt, that figure soared to 6.5 percent.

The fallout from the pandemic has been spread unevenly among states. The sharpest increases in delinquencies came in states that fall into two categories — those that rely heavily on tourism, and regions that bore the brunt of the pandemic.

The five hardest-hit mortgage delinquency states

These were the five states with the biggest increases in mortgage delinquencies, according to Black Knight:

  1. Nevada. In March, just 2.72 percent of borrowers were behind on their home loans. In April, the share of late payers climbed to 7.97 percent of homeowners with mortgages. Las Vegas’ casinos and conventions have been shut down since March, and Sin City had the largest increase in delinquency rates among U.S. metro areas. Statewide, Nevada’s 5.2 percentage point jump was the highest in the country. Nevada’s 28.2 percent unemployment rate in April also was the nation’s highest, according to the U.S. Labor Department.
  2. New Jersey. Its delinquency rate jumped 5.1 percentage points as the state was hit hard by Covid-19 infections. New Jersey’s real estate market already was struggling going into the coronavirus recession. New Jersey’s unemployment rate rose to 15.3 percent in April.
  3. New York. Its delinquency rate rose 4.9 percentage points. New York City has been the nation’s epicenter of coronavirus deaths.
  4. Hawaii. Another tourism-heavy economy, Hawaii has been unable to welcome visitors to its beaches and volcanoes. Its mortgage delinquency rate rose 4.7 percentage points. Hawaii’s 22.3 percent unemployment was the nation’s third-highest.
  5. Florida. The pandemic struck at the peak of Florida’s tourist season. The coronavirus abruptly ended spring break, closed theme parks and shut down baseball’s Grapefruit League. Florida’s delinquency rate jumped 4.6 percentage points.

Some states, on the other hand, were barely brushed by the pandemic. In Iowa, mortgage delinquency rates rose less than a percentage point. In South Dakota, the delinquency rate edged up 1.3 percentage points. (Both Iowa and South Dakota had unemployment of 10.2 percent in April, well below the national average.) Every state experienced an increase in delinquencies from March to April, Black Knight reported.

Since federal and state authorities began shutting down the economy in mid-March, about 38.6 million workers have filed for unemployment insurance. That nearly matches jobless claims filed during the entirety of the Great Recession, which lasted from December 2007 through June 2009.

What to do if you’re facing housing distress

With many homeowners suddenly out of work, the Federal Housing Finance Agency and the Federal Housing Administration have opened forbearance programs that allow for missed mortgage payments. These initiatives let borrowers skip payments for up to a year without facing foreclosure or watching their credit scores crater.

If your finances were hit by Covid-19, talk to your lender as soon as possible about your mortgage relief options. A mortgage forbearance is not automatic, so you can’t just stop making payments without risking default.

Meanwhile, the federal government has offered generous unemployment benefits to workers who have lost their jobs to the pandemic.

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Written by
Jeff Ostrowski
Senior mortgage reporter
Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal.
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