As Home Equity Soared, Mortgage Delinquencies Dropped in September


CoreLogic’s monthly Loan Performance Insights Report for September 2021 shows that 3.9% of all mortgages in the U.S. were in some stage of delinquency (30 days or more past due, including those in foreclosure), representing a 2.4-percentage point decrease compared to September 2020, when it was 6.3%.

Comparatively, the overall delinquency rate in September 2019 was 3.8%.

In September 2021, the U.S. delinquency and transition rates, and their year-over-year changes, were 1.1% for early-stage delinquencies (30 to 59 days past due), down from 1.5% in September 2020. For adverse delinquency (60 to 89 days past due), the rate was 0.3%, down from 0.7% in September 2020 while serious delinquency (90 days or more past due, including loans in foreclosure) was 2.4%, down from 4.2% in September 2020.

The foreclosure inventory rate (the share of mortgages in some stage of the foreclosure process) was 0.2%, down from 0.3% in September 2020. This remains the lowest foreclosure rate recorded since 1999.

The transition rate (the share of mortgages that transitioned from current to 30 days past due) was at 0.6%, down from 0.8% in September 2020.

Mortgage delinquency continued to decline in September, while home equity soared, according to CoreLogic’s most recent Home Equity Report. Despite nearly one-in-two delinquent borrowers being behind on their mortgages by six months or more, high levels of equity assure that relatively few of these borrowers will fall into foreclosure as they exit forbearance. Additionally, the U.S. unemployment rate has continued to fall over the course of the year and, in November 2021, was 4.2%, 10.6 percentage points lower than the rate in April 2020.

“Record home equity levels have been a boon to many homeowners navigating the cross currents of the pandemic,” observes Frank Martell, president and CEO of CoreLogic. “Not only have homeowners used this equity to fuel a record level of home improvements and renovation, it has proven to be a vital factor in helping families ward off foreclosure, pay down existing debt and weather changing market conditions.”

“The economic recovery has pushed down the percent of delinquent borrowers to the lowest level since the pandemic began,” states Dr. Frank Nothaft, chief economist at CoreLogic. “The number of borrowers past due on their mortgage doubled between March and May 2020. The past due rate in September 2021 was the lowest since March 2020.”

In September 2021, all states logged year-over-year declines in overall delinquency rate. The states with the largest declines were Nevada (down 3.7 percentage points), Florida (down 3.6 percentage points) and New Jersey (down 3.6 percentage points).

Two metro areas posted annual increases in overall delinquency in September 2021, both in Louisiana: Houma-Thibodaux (up 3.3 percentage points) and Hammond (up 0.3 percentage points). All other metros saw annual decreases, with Lake Charles, La. posting the largest decrease at 9.3 percentage points.

Read the full report here.

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