Apparently we aren't all procrastinators. Black Knight Financial Services looked at Internal Revenue Service (IRS) filing statistics and how they relate to loan level mortgage performance data for its current edition of Mortgage Monitor and found that 40 percent of tax filers are in and done by the first week in March. In fact, half of that number or one in five have finished and filed their returns within the first two weeks of tax season.
The company says incentive plays a role in this diligence as Americans who file early are more likely to be expecting a refund. On average, they also receive a larger refund than those who file later. The average refund for those filing on or before February 5th was $3,400, more than 35 percent higher than the refund for those filing in early April and nearly 50 per higher than those filing the last week of the season. In fact, IRS has already distributed most tax refunds well before the April 15 tax deadline.
The company says incentive plays a role in this diligence as Americans who file early are more likely to be expecting a refund. On average, they also receive a larger refund than those who file later. The average refund for those filing on or before February 5th was $3,400, more than 35 percent higher than the refund for those filing in early April and nearly 50 per higher than those filing the last week of the season. In fact, IRS has already distributed most tax refunds well before the April 15 tax deadline.
So, what does this have to do with mortgages? Black Knight says if history repeats, nearly 300,000 more borrowers can be expected to bring their delinquent mortgages current in February and March than in a typical month, and changes are they are using their tax refunds to do so. Black Knight Data & Analytics Executive Vice President Ben Graboske said, "We see this increase in cures across the delinquency and foreclosure spectrum, but it is most pronounced in the early and moderate stages of delinquency. This makes sense, in that a tax refund may be sufficient to pay a few months of past-due mortgage payments, but is likely not enough to bring a homeowner out of severe delinquency. Likewise, the most pronounced impact was seen among FHA/VA borrowers, who might be expected to have less cash reserves on hand and therefore be more dependent upon the infusion of funds during tax refund season to pay down late payments. All things being equal, there's no reason to expect this tax season to be any different."
Read more here at Mortgage News Daily.
