The U.S. mortgage delinquency rate fell to nearly pre-pandemic levels in July, decreasing to 4.2% of all mortgages. However, serious delinquencies remained elevated, according to CoreLogic.
Early-stage delinquencies (30 to 59 days past due ) represented 1.1% of all loans in July, down from 1.5% in July 2020.
Mortgages that were 60 to 89 days past due represented 0.3% of all loans, down from 1% in July 2020.
Serious delinquencies (90 days or more past due, including loans in foreclosure) represented 2.8% of all loans, down from 4.1% in July 2020. While still high, it was the lowest serious delinquency rate since May 2020.
Approximately 1 million homeowners remain at least six months behind on payments, according to CoreLogic’s data.
In February 2020, the mortgage delinquency rate stood at 3.6%. Although July’s rate of 4.2% is significantly higher than that, the bulk of the current delinquencies are in the 90 days past due category – meaning the number of borrowers entering delinquency keeps falling. Many of the seriously delinquent borrowers lost their jobs shortly after the pandemic began and have not bounced back since.
In July 2020, the overall mortgage delinquency rate peaked at 6.5%.
The foreclosure inventory rate (the share of mortgages in some stage of the foreclosure process) was 0.2%, down from 0.3% in July 2020. It was the lowest foreclosure rate recorded since CoreLogic began recording data in 1999.
“While we continue to see serious delinquencies improve, approximately one million people nationwide have been unable to make payments for at least half a year,” CoreLogic says in the report. “In fact, the share of borrowers six months or more past due made up about one-half of the total delinquencies in July, with many still leaning on options such as forbearance, loan modifications and other government provisions to keep from entering foreclosure.”
“Declining delinquency levels are an encouraging sign of economic improvement and the durability of the housing market,” says Frank Martell, president and CEO of CoreLogic. “Looking ahead to the end of many forbearance and other assistance programs, many borrowers receiving support must consider their financial options, including a potential loan modification, to ensure they stay current and keep foreclosures at bay.”
“Even if loan modification or income recovery is unable to help delinquent homeowners become and remain current on their payments, the double-digit rise in home prices may help them avoid a distressed sale,” adds Frank Nothaft, chief economist at CoreLogic. “Homeowners with substantial home equity are far less likely to experience a foreclosure sale, and fortunately, the CoreLogic Home Equity Report found the average owner gained $51,500 in equity in the past year — a five-fold annual increase.”
States that saw the largest decreases in annual overall delinquency rates in July included New Jersey (down 3.9 percentage points), Florida (down 3.5 percentage points) and Nevada (down 3.3 percentage points).
Cities that saw the largest decreases in delinquency rates included Miami (down 5.4 percentage points), Laredo, Texas (down 5.1 percentage points), and Kingston, N.Y. (down 5 percentage points).
Photo: Sharon McCutcheon