CoreLogic: Mortgage Delinquency, Foreclosure Rates at 12-Year Low

CoreLogic, Irvine, Calif., said 4 percent of mortgages nationally were in some stage of delinquency in August, the lowest rate since 2006.

The company’s monthly Loan Performance Insights report said the mortgage delinquencies (30 days or more past due, including those in foreclosure) were down by 0.6 percentage point from a year ago. The foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, fell to 0.5 percent, down 0.1 percentage point from a year ago, the lowest for any month since September 2006.

The CoreLogic report comes on the heels of last week’s Mortgage Bankers Association 3rd Quarter National Delinquency Survey, which reported the delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 4.47 percent of all loans outstanding, up 11 basis points from the previous quarter, but down 41 basis points from one year ago. The percentage of loans on which foreclosure actions were started dropped one basis point from the second quarter to 0.23 percent, its lowest level since fourth quarter 1985.

CoreLogic said the rate for early-stage delinquencies (30-59 days past due) fell to 1.8 percent in August, down from 2 percent a year ago. The share of mortgages 60-89 days past due in August fell to 0.6 percent, down from 0.7 percent a year ago. The serious delinquency rate (90 days or more past due, including loans in foreclosure) fell to 1.5 percent, down from 1.9 percent a year ago. This serious delinquency rate was the lowest for August since 2006 when it was 1.4 percent,and the lowest for any month since March 2007, when it was also 1.5 percent.

The report said no state posted an annual gain in the overall delinquency rate. Alaska was the only state to post an annual gain in the serious delinquency rate.

“With home-price growth building owners’ equity, and the low national unemployment rate providing opportunities for income growth, further declines in U.S. delinquency and foreclosure rates are likely in coming months,” said Frank Nothaft, chief economist for CoreLogic. “The CoreLogic Home Price Index for the U.S. recorded 5.7 percent annual growth in August. This price gain helped the average homeowner build about $16,000 in equity during the prior year and reduces the likelihood of a borrower transitioning from delinquency to foreclosure.”

CoreLogic reported the share of mortgages that transitioned from current to 30 days past fell to 0.8 percent in August, down from 0.9 percent a year ago. By comparison, in January 2007, just before the start of the financial crisis, the current-to-30-day transition rate was 1.2 percent, while it peaked in November 2008 at 2 percent.

The report noted while serious delinquencies declined in most metropolitan areas during the past 12 months, urban centers affected by natural disasters continue to show lingering effects. The serious delinquency rate in the Houston, Naples (Fla.), and Cape Coral (Fla.) metropolitan areas, affected by 2017 Hurricanes Harvey and Irma, remained 0.4 percentage points higher than one year ago.

“Declines in delinquency rates are good news for America’s homeowners and mortgage lenders,” said Frank Martell, president and CEO of CoreLogic. “However, risks that create loan default like natural disasters, overvalued markets and an eventual rise in unemployment remain in the market.”