from CoreLogic
The Loan Performance Insights Report shows that nationally, 3.6% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in February 2020, representing a 0.4 percentage point decline in the overall delinquency rate compared with February 2019, when it was 4%.
February marked the 26th consecutive month of falling annual overall delinquency rates. However, as the coronavirus (COVID-19) pandemic continues to impact the economy, and claims for unemployment insurance reach record highs, homeowners are at an increased risk of becoming delinquent in the coming months — with the risk for borrowers in negative equity being even higher.
While the share of homes in negative equity fell to 3.5% at the start of 2020, home prices are forecasted to slow drastically over the next several months, which could drive down equity. States with already high negative equity share, including Louisiana, Connecticut, Maryland, and Illinois, are most at risk for increases in delinquencies.
“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.”
To get an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency. In February 2020, the U.S. delinquency rates, and their year-over-year changes, were as follows:
· Early-Stage Delinquency (30 to 59 days past due): 1.8%, down from 2% in February 2019.
· Adverse Delinquency (60 to 89 days past due): 0.6%, unchanged from February 2019.
· Serious Delinquency (90 days or more past due, including loans in foreclosure): 1.2%, down from 1.4% in February 2019. This is the lowest serious delinquency rate since June 2000, when it was also 1.2%.
As of February 2020, the foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, was 0.4% — unchanged from February 2019. February’s foreclosure inventory rate tied the prior 15 months as the lowest for any month since at least 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.”
In February, for the fifth consecutive month, no states posted a year-over-year increase in the overall delinquency rate, and 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.
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For ongoing housing trends and data, visit the CoreLogic Insights Blog: www.corelogic.com/insights.
Methodology
The data in this report represents foreclosure and delinquency activity reported through December 2019.
The data in this report accounts for only first liens against a property and does not include secondary liens. The delinquency, transition and foreclosure rates are measured only against homes that have an outstanding mortgage. Homes without mortgage liens are not typically subject to foreclosure and are, therefore, excluded from the analysis. Approximately one-third of homes nationally are owned outright and do not have a mortgage. CoreLogic has approximately 85% coverage of U.S. foreclosure data.
Source: CoreLogic
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About CoreLogic
CoreLogic (NYSE: CLGX), the leading provider of property insights and solutions, promotes a healthy housing market and thriving communities. Through its enhanced property data solutions, services and technologies, CoreLogic enable real estate professionals, financial institutions, insurance carriers, government agencies, and other housing market participants to help millions of people find, acquire and protect their homes. For more information, please visit www.corelogic.com.
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