Distressed

The increase in late payments ends three consecutive months of declines to record lows, but the uptick could be an aberration.

The jump for second mortgages and bank cards was even more pronounced, according to indices published by Standard & Poor’s and Experian.

A Federal Reserve Bank of Philadelphia research group called the early indication of outcomes “concerning given overall strong market conditions.”

Most distressed borrowers who obtained adjustments to their payment amounts saved more than 20% in the first quarter, according to the Federal Housing Finance Agency.

Foreclosure starts also fell, coming in below pre-pandemic pace, according to Black Knight.

Rising interest rates and emergence from pandemic contingencies could put increased strain on the ability to repay, but signs of near-term loan performance stress have been limited.

But a slower-than-anticipated rate of repossessions suggest distressed homeowners are finding solutions.

The opinion heightens the need for servicers to be careful about billing communications, particularly when a distressed loan or foreclosure is involved.

While the government-sponsored enterprise’s single-family mortgages are still not performing as well as they did before the pandemic, the most recent vintages are getting there.

But re-entries crept up, while the percentage of borrowers exiting plans without loss mitigation in place increased.