Loan performance continued to improve in January although the number of delinquencies remains significantly elevated from pre-pandemic levels. Black Knight's first look at the month's loan performance data has both good news and some that is disquieting. The good news is a 121,000-loan decline in the number of loans that are 30 or more days past due but not in foreclosure when compared to the prior month. This reduced the national delinquency rate to 5.85 percent, the first time the rate has been under 6 percent since the pandemic hit in March 2020.

The number of seriously delinquent loans, those 90 or more days past due but not in foreclosure, was reduced by 56,000 loans. Black Knight includes loans that are in active forbearance plans in its delinquency numbers if they are non-current.

However, despite the improvement, there are still over 3.1 million delinquent loans nationwide, 1.4 million or 82 percent more than in January of 2020. Of these, slightly more than 2 million are over 90 days past due. Black Knight says this is five times the pre-pandemic level.

Because of relief provided by Congress, there are relatively few loans entering the foreclosure process. There were 5,900 foreclosure starts in January, 86 percent fewer than a year earlier. The foreclosure inventory, the number of loans in the process of foreclosure, at 171,000, is down by 7,000 from December and 75,000 year-over-year.

Black Knight says recent extensions in forbearance plans terms and of the national foreclosure moratorium have reduced near-term risk, but at the same time may have the effect of extending the length of the recovery period.   At the current rate of improvement, 1.8 million mortgages will still be seriously delinquent at the end of June when foreclosure moratoriums on government-backed loans are currently slated to expire.

It doesn't appear at present, even with the elevated levels of serious delinquency, that the country is looking at a repeat of the last decade's foreclosure epidemic. Of the five states with the highest rates of seriously past due loans, Mississippi, Louisiana, Hawaii, Nevada, and Maryland, none have rates exceeding 6.25 percent rate. At the peak of the housing crisis all had higher levels of delinquency and Mississippi, Louisiana, and Nevada had rates in double digits.

Black Knight will provide a more in-depth review of this data in its monthly Mortgage Monitor report. It will be published on March 8.