Early-Stage Delinquencies Jumped in September Due to Storms

The wrath of Harvey, Irma and Maria is still being felt in the housing market, as the storms continue to push up the mortgage delinquency rate in the impacted areas.

As of the end of September, the overall U.S. mortgage delinquency rate stood at about 5%, a decrease of 0.2% compared with September 2016, according to CoreLogic.

However, early-stage delinquencies, defined as 30 to 59 days past due, were up due to the impact of the storms that struck Texas, Florida and Puerto Rico.

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The U.S. rate for early-stage delinquencies was 2.4% in September, up 0.3 percentage points from 2.1% in September 2016, according to the software, data and analytics firm’s monthly Loan Performance Insights Report.

The report shows that, as of the end of the month, delinquencies in the impacted areas were trending up.

“September’s early-stage delinquency rate increased by 0.3 percent from a year ago, the largest increase since June 2009,” says Frank Nothaft, chief economist for CoreLogic, in a statement. “This does not reflect a deterioration in credit, but rather the impact of the hurricanes in Texas, Florida and Puerto Rico.”

“September’s early-stage delinquency transition rate rose to 2.6 percent in Texas, and it rose to 3.2 percent in Florida, which is higher than the one percent that’s typical for both states,” Nothaft says. “Texas’ and Florida’s early-stage delinquency transition rates in September are much lower than New Orleans in September 2005, when the transition rate reached 17.4 percent as a result of Hurricane Katrina.”

The share of mortgages that were 60 to 89 days past due was 0.7%, unchanged from September 2016.

The serious delinquency rate (more than 90 days past due) was 1.9% in September, a decrease of 0.4 percentage points compared with September 2016. The serious delinquency rate has been hovering around 1.9% since June, when it reached the lowest level since October 2007.

The U.S. foreclosure rate decreased 0.2 percentage points compared with September 2016, according to the report.

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The foreclosure inventory rate stood at about 0.6%, down from 0.8% in September 2016. This matches the foreclosure inventory rate seen in August and September, when it reached the lowest rate in 11 years.

“While natural hazard risk was elevated in 2017, the economic fundamentals that drive mortgage credit performance are the best in two decades,” says Frank Martell, president and CEO of CoreLogic. “The combination of strong job growth, low unemployment rates, steady economic performance and prudent underwriting has led to continued improvement in mortgage performance heading into next year.”


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