CoreLogic: Mortgage Delinquency, Foreclosure Rates Lowest in 12 Years

Mike Sorohan msorohan@mba.org

August 14, 2018

Ahead of Thursday's release of the Mortgage Bankers Association's National Delinquency Survey, CoreLogic, Irvine, Calif., said overall foreclosure and delinquency rates fell to 12-year lows. But it also noted 2018 wildfires in California and other western states are "outpacing" the devastating fires of 2017, putting potentially thousands of mortgages at risk.

The company's monthly Loan Performance Insights Report said nationally, 4.2 percent of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in May, an 0.3 percentage point decline from a year ago (4.5 percent).

The foreclosure inventory rate fell to 0.5 percent in May, down 0.2 percentage points from 0.7 percent a year ago. The foreclosure inventory rate was the lowest for any month since September 2006 and the lowest for May since 2006.

The report said the rate for early-stage delinquencies (30-59 days past due) fell to 1.8 percent in May, down from 1.9 a year ago. The share of mortgages 60-89 days past due was unchanged from a year ago at 0.6 percent. The serious delinquency rate (90 days or more past due, including loans in foreclosure) fell to 1.8 percent in May, down from 2 percent a year ago. The May serious delinquency rate was the lowest for that month since 2007 when it was 1.6 percent.

CoreLogic also reported the share of mortgages that transitioned from current to 30 days past due was unchanged from a year ago at 0.8 percent. 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 delinquency rates continue to remain lower than a year earlier except in Florida and Texas, the hardest-hit states during last year's hurricane season, in California, where current delinquency rates are well below the national level, the regions impacted by recent wildfires are becoming more susceptible to mortgages entering some stage of delinquency as the fires continue to burn.

According to a recent Carr Fire analysis by CoreLogic, the 2018 season is outpacing 2017 with more than 292,000 acres burned this year thus far. The Carr Fire outside the Redding and the French Gulch communities presented the greatest risk to homeowners, with CoreLogic estimating a total of $3.5 billion potential reconstruction costs in that area.

"While the strong economy has nudged serious delinquency rates to their lowest level in 12 years, areas hit by natural disasters have had increases," said CoreLogic Chief Economist Frank Nothaft. "The tragic wildfires in the West will likely lead to a spike in delinquencies in hard-hit neighborhoods."

For example, Nothaft said, the wildfire in Santa Rosa last year destroyed or severely damaged more than 5,000 homes. Delinquency rates rose in the aftermath, and in the ensuing months we observed home-price growth accelerate and sales decline. "We will likely see the same scenario unfold in fire-ravaged communities this year," he said.

"We have observed continued challenges for families to make mortgage payments in regions impacted during the 2017 Hurricane season," added Frank Martell, president and CEO of CoreLogic. "For the coming months, we will monitor mortgage and housing trends in areas now plagued by wildfires, particularly in California, Montana and Arizona."

Last week, ATTOM Data Solutions, Irvine, Calif., reported 5.5 million U.S. properties as "seriously underwater" in the second quarter, representing 10.1 percent of all properties with a mortgage.

MBA releases its Second Quarter National Delinquency Report this Thursday, Aug. 16. The NDS covers 39 million loans on one- to four- unit residential properties reported by more than 100 lenders, including mortgage bank, commercial banks and thrifts.

Share this article