Although hurricanes Harvey, Irma and Maria drove up the U.S. mortgage delinquency rate in the fourth quarter, overall mortgage performance continued to improve in 2017, according to Black Knight’s Mortgage Monitor Report.
“Hurricanes Harvey and Irma significantly impacted 2017 mortgage performance metrics,” says Ben Graboske, executive vice president for Black Knight Data and Analytics, in a statement. “Overall, there were approximately 164,000 more past due loans at the end of 2017 than the year before, pushing the national delinquency rate to a 23-month high.”
However, when the hurricane impacted areas are omitted, the report shows that the U.S. mortgage delinquency rate (30 days out more past due) fell to 11% below long-term norms in 2017.
Similarly, serious delinquencies (90 days or more past due) decreased, falling about 14% year over year, when the storm ravaged areas are left out.
“Excluding the hurricane impact … we see that there were 84,000 fewer loans 90 or more days past due than last year – a 14 percent reduction,” Graboske says. “The national non-current rate – which tracks all loans 30 or more days past due or in active foreclosure – edged down slightly from 2016, even including the effects of the storms. Isolating those non-hurricane areas, though, we see that the total number of past-due mortgages fell by more than 140,000 – which brought the non-current rate in these areas down 10 percent below long-term norms.”
When looking at foreclosure starts and the national foreclosure inventory rate, however, 2017 was a year of continuing improvement – despite the impact from the storms.
A total of about 649,000 foreclosure starts were initiated in 2017 – the fewest of any year since 2000, Black Knight’s research shows.
That’s 15% below 2016 and roughly half the pre-crisis annual average.
The foreclosure inventory, meanwhile, is on track to normalize in 2018 and currently stands at about 0.65%.
How quickly it can improve, however, is a function of how quickly the foreclosure pipeline moves. As of the end of 2017, there were about 125,000 active foreclosures remaining in which no payment had been made in more than two years. What’s more, about 63,000 had not had a payment in five years or more.
There were about 232,000 completed foreclosure sales in 2017 – the lowest single-year total since the turn of the century, Black Knight says.
“Due to the various foreclosure moratoria put into place after the storms, there was no hurricane impact to speak of in that regard,” Graboske explains. “In fact, the improvement in foreclosure inventory – which continued unabated in 2017 – may have actually received a short-term boost from the moratoria.
“In any case, it was a record-setting year in terms of foreclosure activity. Just 649,000 foreclosure starts were initiated in 2017, which was the fewest of any year since 2000, with the lowest number of first-time starts on record,” he adds. “In fact, first-time foreclosure starts were 15 percent below 2016 levels and roughly half the annual average seen from 2000-2005.”