Mortgage
delinquencies continued to rise in July according to CoreLogic’s new loan
performance report. The company found that 6.6 percent of all mortgages were at
least 30 days past due (including those in foreclosure.) This represents a 2.8-percentage point increase in the
overall delinquency rate
compared to July 2019, when it was 3.8 percent. It was, however, a lower rate than the
7.1 percent reported for June, at that point a 3.1-point annual increase.

The improvement was in early stage delinquencies, those loans 30
to 59 days past due. They declined from 1.8 percent in July of last year after
spiking in April of this year to 4.2 percent.

The rate of adverse delinquencies,
loans 60 to 89 days past due, rose to 1
percent from 0.6 percent a year earlier, but were down from 2.8 percent in May.
These improvements were offset by serious delinquencies, loans at least 90 days
past due, including loans in foreclosure. That category surged from 1.3 percent
in July 2019 to 4.1 percent. It is the highest serious delinquency rate since
April 2014.

Further, the 120-day bucket was the highest in
the 21 years CoreLogic has been tracking the data, 1.4 percent. The company
said the persistent instability of the job market pushed many homeowners
further down the delinquency funnel this summer. Dr.
Frank Nothaft, chief economist at CoreLogic said the 120-day rate was more than
double its December 2009 Great Recession peak. “The spike in delinquency was
all the more stunning given the generational low of 0.1 percent in March” he
said.

The foreclosure inventory, loans in
some stage of the foreclosure process, is the lowest for any month in at least
21 years at 0.3 percent, down from 0.4 percent in July 2019. Most foreclosures
actions are on hold due to the CARES Act.

The share of mortgages that
transitioned from current to 30 days past due during the month was 0.8 percent,
unchanged from the previous July. The transition rate has slowed since April
2020, when it peaked at 3.4 percent.

Home prices as measured by CoreLogic’s Home Price Index (HPI)
have been rising at an accelerated rate but unemployment levels in hard-hit
areas remain stubbornly high
, the company said, leaving
some borrowers house-rich but cash poor. Despite the slow reopening of several
sectors of the economy, recovery for other industries like entertainment,
tourism, oil, and gas have a more uncertain outlook for the remainder of 2020.
With persistent job market and income instability, Americans continue to tap
into savings to stay current on their home loans. But as savings run out,
borrowers could be pushed further down the delinquency funnel.

In July, all states logged annual increases in
both overall and serious delinquency rates. COVID-19 hotspots were again
impacted the most, with Nevada (up 5.2 percentage points), New Jersey (a 4.8
percentage points increase), Hawaii (plus 4.7 percentage points), New York (up
4.6 percentage points) and Florida (up 4.4 percentage points) topping the list
for overall delinquency gains.

Similarly, all U.S.
metro areas logged at least a small increase in serious delinquency rates in
July. Odessa, Texas, hard hit by job losses in the oil and gas industry, experienced
the largest annual increase, 7.5 percentage points. Other metro areas with
significant serious delinquency increases included Laredo, Texas (6.6 points);
Miami (6.4 points); McAllen, Texas (6.2 points) and Kahului, Hawaii (5.9
percentage).

By Jann Swanson , dated 2020-10-13 13:08:27

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Courtesy of Mortgage News Daily

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