CoreLogic: Foreclosures Remain Low; Serious Delinquencies Continue to Build Up

Ahead of this morning’s quarterly National Delinquency Survey from the Mortgage Bankers Association, CoreLogic, Irvine, Calif., said the 150-day delinquency rate reached its highest level since January 1999, noting that forbearance provisions have helped foreclosure rates maintain historic lows.

The company’s monthly Loan Performance Insights Report reported as of August, 6.6% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure). This represents a 2.9-percentage point increase in the overall delinquency rate compared to a year ago, when it was 3.7%.

“The spike in delinquency was all the more stunning given the generational low of 0.08% in March and April,” said CoreLogic Chief Economist Frank Nothaft.

Other report findings:

–Early-Stage Delinquencies (30 to 59 days past due): 1.6%, down from 1.8% in August 2019, and down from 4.2% in April when early-stage delinquencies spiked.

–Adverse Delinquency (60 to 89 days past due): 0.8%, up from 0.6% in August 2019, but down from 1% in July and from 2.8% in May.

–Serious Delinquency (90 days or more past due, including loans in foreclosure): 4.3%, up from 1.3% in August 2019. This is the highest serious delinquency rate since February 2014.

–Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.3%, down from 0.4% in August 2019. The August 2020 foreclosure rate is the lowest since at least January 1999.

–Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 0.9%, up from 0.8% in August 2019. The transition rate has slowed since April 2020, when it peaked at 3.4%.

“Forbearance programs continue to reduce the flow of homes into foreclosure and distressed sales and has been the key to helping many families who have been particularly hard hit by the pandemic,” said Frank Martell, president and CEO of CoreLogic. “Even though foreclosure rates are at a historic low, the spike in 150-day past-due loans points to bumpy waters ahead.”

The report said every state logged an annual increase in overall delinquency rates in August, with popular tourism destinations again showing the highest increases, with Nevada (up 5.3 percentage points), Hawaii (up 4.9 percentage points), New Jersey (up 4.6 percentage points), Florida (up 4.5 percentage points) and New York (up 4.4 percentage points) topping the list for gains.

Similarly, nearly all U.S. metro areas logged an increase in overall delinquency rates in August. Odessa, Texas — which has been hard hit by job loss in the oil and gas industry — again experienced the largest annual increase of 10.1 percentage points. Other metro areas with significant serious delinquency increases included Midland, Texas (up 7.9 percentage points); Kahului, Hawaii (up 7.6 percentage points) and Miami (up 7.0 percentage points). Dubuque, Iowa, was the only metro area to experience an annual decline in overall delinquency rate at -1.5%.

This morning at 10:00 ET, MBA will release its National Delinquency Survey for the third quarter. In the second quarter, MBA reported an increase in delinquency rates on one-to-four-unit residential properties to 8.22 percent of all loans outstanding (seasonally adjusted).

The NDS, conducted since 1953, covers nearly 40 million loans on one- to four- unit residential properties. Loans surveyed are reported by more than 100 lenders, including mortgage bank, commercial banks and thrifts. MBA Vice President of Industry Analysis Marina Walsh will provide insight into the numbers. MBA NewsLink will provide coverage today with a special afternoon edition.