Mortgage Foreclosures and Delinquencies Fall in Latest Year
Nov 15th, 2018 @ 8:05 AM by Amber Nelson
Mortgage borrowers did better at keeping up with their loan payments in the past year, according to new data from CoreLogic. They did so much better, in fact, that the rate of 30-day delinquencies dropped to its lowest level in almost 13 years.
CoreLogic’s Loan Performance Insights report found that the percentage of home mortgage loan payments that were 30 days or more past due dropped to 4.0% in August 2018, down from 4.6% a year ago. The rate has not been that low since March 2006.
Foreclosure inventory fell to 0.5% of all properties for sale, down from 0.6% from the previous year.
The report also stated that early-stage delinquencies – mortgage loans that are between 30 and 59 days late on payments – fell to 1.8% in August, down from 2.0% the year before. The share of home loans that were 60 to 89 days delinquent inched down to 0.6% from 0.5% in August 2017. Early-stage delinquencies are used by CoreLogic to determine the overall health of the mortgage market. The declines in delinquencies paint a rosier picture for this year.
“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 CoreLogic Chief Economist Dr. Frank Nothaft. “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.”
Yet there still may be some reason to be cautious about market optimism according to CoreLogic President and CEO Frank Martell. “Declines in delinquency rates are good news for America’s homeowners and mortgage lenders,” he said “However, risks that create loan default like natural disasters, overvalued markets and an eventual rise in unemployment remain in the market. CoreLogic Market Conditions Indicator data has identified more than one-third of metropolitan areas are overvalued, putting them at risk of price declines and rising delinquencies if local job losses should occur.”
The report noted that the lowest 30-plus delinquency rate in August by state was found in Colorado while the highest rate was in Mississippi.
Amber Nelson is a seasoned mortgage industry writer and a regular contributor to Loan.com and Mortgage101.com.