Mortgage Delinquency Rate Fell in September But Impact from Disasters Looms

The national mortgage delinquency rate fell to 4.4% of all loans in September – down 0.6% compared with 5% of all loans September 2017, according to CoreLogic.

However, areas impacted by the fall hurricanes and the wildfires in the West continue to see elevated levels of delinquencies, which is common when natural disasters strike.

“The effects of 2018’s natural disasters have begun to show clearly in our delinquency data,” Frank Nothaft, chief economist for CoreLogic, says in the firm’s latest Loan Performance Insight report. “After Kilauea’s eruption began in May, serious delinquency rates jumped on the Big Island by 10 percent between June and September, while falling by four percent in the rest of Hawaii.

“The Carr Fire began late July, and the 30- or 60-day delinquency rate in the Redding metro area jumped 19 percent from August to September,” Nothaft says. “This was the largest monthly spike up in this delinquency metric since July 2006, when the foreclosure crisis was beginning. Additionally, 30-day delinquency rates doubled in major metros in North Carolina in September, the first month after Hurricane Florence reached landfall.”

Early-stage delinquencies – defined as 30 to 59 days past due – were at a rate of 2.2%, down from 2.4% in September 2017.

The share of mortgages that were 60 to 89 days past due was 0.7%, unchanged from September 2017.

The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was 1.5% in September 2018, down from 1.9% in September 2017, and unchanged compared with August 2018.

It was the lowest serious delinquency rate for the month of September since 2006, when it was 1.4%, and was the lowest for any month – prior to August 2018, since it was also 1.5% – since March 2007.

The foreclosure inventory rate – the share of mortgages in some stage of the foreclosure process – stood at 0.5%, down 0.1% from September 2017.

The September foreclosure inventory rate tied with the April, May, June, July and August rates this year as the lowest for any month since September 2006, when it was also 0.5%.

“Outside of areas affected by natural disasters, serious delinquency and foreclosure rates have declined steadily across the nation as the labor market has improved and home prices have risen,” says Frank Martell, president and CEO of CoreLogic. “However, we have also seen a rise in high loan-to-value and high debt-to-income lending in our CoreLogic TrueStandings data, heightening the risk of a significant upturn in loan default if the economy slips into recession or home prices decline.”

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