While the rate of non-current loans remained
sharply higher than a year ago, CoreLogic reports that serious delinquencies,
loans more than 89 days past due, began to level off in September for the first
time since the start of the pandemic. The company’s Loan Performance Report
puts the national delinquency rate, loans 30 or more days past due including
those in foreclosure, at 6.3 percent. This is 2.5 points higher than the 3.8
percent rate in September 2019.
Loans in the earliest stage of
distress, 30 to 59 days past due, accounted for 1.5 percent of active
mortgages, down from 1.9 percent in September 2019 and 4.2 percent in April
when early stage delinquencies spiked due to the COVID-19 pandemic. The rate for
loans 60 to 89 days delinquent is 0.1 percentage point higher than a year
earlier at 0.7 percent but has declined from 2.8 percent last May when that
delinquency bucket hit a recent high. The serious delinquency rate, 4.2
percent, is more than 3 times its rate in September 2019 (1.3 percent) but is
down slightly from August’s 4.3 percent.
The Foreclosure Inventory Rate (the
share of mortgages in some stage of the foreclosure) has remained at 0.3
percent, the lowest rate since at least January 1999, for six consecutive months.
It has remained stable throughout the pandemic crisis partially because of the
foreclosure moratorium imposed by Congress through the CARES Act. In September
of last year, the foreclosure inventory rate was 0.4 percent.
“Although delinquencies remain high, it’s clear the economy
has passed an initial stress test. High home equity balances and structural
protections put in place as a result of the Great Recession contributed to
surviving this test,” said Frank Martell, president and CEO of CoreLogic.
“Housing demand remains strong, and rates low, which provides optimism
that the housing market will continue to be a bright spot in this COVID-ravaged
The transition rate, (the share of
mortgages that moved from current to 30 days past due) was 0.8 percent,
unchanged from September 2019. This represents a substantial slowdown since
April 2020 when the transition rate peaked at 3.4 percent.
Every state saw its
delinquency rate increase in September compared to a year earlier. As has been
the case since the pandemic crisis hit, those states that rely heavily on
tourism were hardest hit. Nevada’s rate was up 4.9 percentage points, Hawaii’s
rose 4.7 points, and Florida’s was 4 points higher.
Nearly all U.S. metro
areas also logged increases, led by Lake Charles, Louisiana where Hurricane
Laura hit in August at a 10.7 percentage point annual growth. That area,
however, barely topped Odessa, Texas which was up 10.3 points.
“Our analysis of CoreLogic public
records shows that more than one-half of all home mortgage loans created since
the onset of the pandemic have been no-cash-out refinance,” said Dr. Frank
Nothaft, chief economist at CoreLogic. “By reducing their mortgage rate with
these types of loans, homeowners have been lowering both their interest expense
and risk of delinquency.”