COVID-19 continued to impact mortgage
performance in May. CoreLogic said the number of loans in each stage of
delinquency, with the exception of those in foreclosure, grew in May, the
second straight month that early-stage (loans 30 to 59 days past due) and
adverse (loans 60 to 89 days past due) delinquencies were up on an annual basis.
The company’s monthly Loan Performance Insights
report, notes year-over-year increases in overall delinquencies in all 50 states
with the
geography of the increases highly correlated with the pandemic’s impact.

The national foreclosure rate, which includes
all post due loans including those in foreclosure, more than doubled compared
to May 2019
, rising from 3.6 percent to 7.3 percent of all mortgages. Early stage
delinquencies increased from 1.7 percent a year earlier to 3.0 percent and
adverse delinquencies jumped from 0.6 percent to 2.8 percent.

May marked the third month since the first
COVID-19 cases began to spread and serious delinquencies were affected for the
first time. Loans that were 90 days or
more past due, including those in foreclosure posted the first year-over-year increase
since November 2010, ticking up from 1.3 percent in May 2019 to 1.5 percent.
CoreLogic said 75 percent of metropolitan areas saw growth in the serious
delinquency rate.

With
a foreclosure moratorium in affect, the foreclosure inventory (loans in process
of foreclosure) dipped to 0.3 percent from 0.4 percent. It was the second month
in a row that the foreclosure rate marked a new post-1999 low.

 

 

The
transition rate, which measures the share of mortgages that moved from current
in April to past due in May was 2.2 percent compared to 0.8 percent the prior
year. By comparison, in January 2007 – just before the start of the financial
crisis – the current- to 30-day transition rate was 1.2 percent and peaked in
November 2008 at 2 percent.

The shift in loan performance in
recent months is virtually unprecedented. Prior to the pandemic, overall
delinquencies had declined for 27 straight months and the national unemployment
rate had spent several months at an all-time low. However, by May 2020, just
two months after COVID-19 was declared a global pandemic, U.S. unemployment
surged past 13 percent. This left more than 4 million homeowners, who hold more
than 8 percent of all mortgages, little choice but to enter a COVID-19 mortgage
forbearance program.

“The
national unemployment rate soared from a 50-year low in February 2020, to an
80-year high in April,” said Dr. Frank Nothaft, chief economist at
CoreLogic. “With the sudden loss of income, many homeowners are struggling
to stay on top of their mortgage loans, resulting in a jump in non-payment.”

Absent
further government programs and support, CoreLogic forecasts the U.S. serious
delinquency rate will quadruple by the end of 2021, pushing 3 million
homeowners into serious delinquency.

Government and industry relief programs have helped to cushion
the initial financial blow of the pandemic
for millions of U.S. homeowners,”
said Frank Martell, president and CEO of CoreLogic. “COVID-19 and the resulting
pressures continue to influence the economic activity of many households.
Barring additional intervention from the Federal and State governments, we are
likely to see meaningful spikes in delinquencies over the short to medium
term.”

All states logged increases in overall delinquency rates in May
from a year earlier. New Jersey and Nevada, both hot spots for the virus,
experienced the largest overall delinquency gains, each were up 6.4
percentage-point from the previous May. New York again remained atop the list
with a 6.1 percentage-point increase, while Florida experienced a gain of 5.8
percentage points.

On the metro level,
nearly every U.S. metropolitan area posted at least a small annual increase in
their overall delinquency rate, with tourism destinations such as Miami (up 9.2
percentage points), and Kahului, Hawaii (up 8.8 percentage points), posting two
of the largest increases. Odessa, Texas, with a local economy strongly tied to
the oil industry, posted an annual gain of 9 percentage points. Odessa also tied
with Laredo for the largest increase in serious delinquencies, each were up 1.1
percentage points. 

By Jann Swanson , dated 2020-08-11 11:22:47

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Courtesy of Mortgage News Daily

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