CoreLogic’s Loan
Performance Insights Report
has shown only incremental changes, primarily
declines, in most of its measures of delinquency.
The most recent report,
covering February, is more of the same, marking the 26th straight
month that delinquency rates have fallen, and most are now at record lows. However,
the company says it expects, starting with the March report, that those
measures will begin to move higher and that “we could see increases in serious
delinquencies as high as four-fold by the second half of 2021.”

CoreLogic said the national delinquency rate,
mortgages that were 30 days or more past due including those in foreclosure was
3.6 percent in February. This was down 0.4 percentage points
from February 2019.

With unemployment rates at record highs due to
the COVID-19 pandemic, homeowners are at an increased risk of becoming delinquent
in the coming months – with the risk for borrowers in negative equity being
even higher. The share of homes that are underwater, owing more on their
mortgage than the value of their home, fell to 3.5 percent at the start of
2020, but slowing price increases over the next few months could increase that
share. States with disproportionate numbers of underwater homes are most at risk
for increases in delinquencies. That would include Louisiana, Connecticut, and
Maryland

Delinquency and foreclosure rates
were at a generational low in February
as the U.S. unemployment rate matched a
50-year low,” said Dr. Frank Nothaft, chief
economist at CoreLogic. “However, the pandemic-induced closure of
nonessential businesses caused the April unemployment rate to spike to its
highest level in 80 years and will lead to a rise in delinquency and
foreclosure. By the second half of 2021, we
estimate a four-fold increase in the serious delinquency rate, barring
additional policy efforts to assist borrowers in financial distress.”

The early stage delinquency rate
(loans 30 to 59 days past due) was 1.8 percent in February, down from 2.0
percent a year earlier and the rate for those 60 to 89 days past due was 0.6
percent, unchanged on an annual basis. Serious delinquencies, loans 90 ore more
days past due including those in foreclosure, accounted for 1.2 percent of all
loans, the lowest rate since June 2000. The foreclosure inventory, loans in the
process of foreclosure was unchanged at 0.4 percent, in a tie for the lowest
rate since January 1999.

“After a long period of decline, we are likely
to see steady waves of delinquencies throughout the rest of 2020 and into 2021.
The pandemic and its impact on national employment is unfolding on a scale and
at a speed never before experienced and without historical precedent,” said Frank
Martell, president and CEO of CoreLogic. “The next six months will provide
important clues on whether public and private sector countermeasures -current
and future – will soften the blow and help us avoid the protracted, widespread
foreclosures and delinquencies experienced in the Great Recession
.”

February was the fifth consecutive month in
which no states posted a year-over-year increase in the overall delinquency
rate. Mississippi and Maine (both down 0.9 percentage points) recorded the
largest declines. Only four metropolitan areas recorded small increases in
overall delinquency rates and eight recorded increases in serious delinquency
rates.

By Jann Swanson , dated 2020-05-12 09:04:41

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Courtesy of Mortgage News Daily