Mortgage Delinquency in November Reaches the Lowest Level Since March

Tue, 09 February 2021  |  mortgage housing 

A new report from CoreLogic indicates that despite the pandemic, mortgage delinquency in November reached the lowest level since March. On a national level, 5.9% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure), which represents a 2-percentage point increase in the overall delinquency rate compared to November 2019, when it was 3.9%. This is the lowest overall delinquency rate since an initial jump in April 2020.

To gain an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency, including the share that transitions from current to 30 days past due. In November 2020, the U.S. delinquency and transition rates, and their year-over-year changes, were as follows:

• Early-Stage Delinquencies (30 to 59 days past due): 1.4%, down from 2% in November 2019.
• Adverse Delinquency (60 to 89 days past due): 0.6%, unchanged from November 2019.
• Serious Delinquency (90 days or more past due, including loans in foreclosure): 3.9%, up from 1.3% in November 2019. This is the lowest serious delinquency rate since June 2020, pointing to signs of increasing stabilization.
• Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.3%, down from 0.4% in November 2019.
• Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 0.8%, down from 1% in November 2019.

The unemployment rate fell from 14.8% in April to 6.7% by the end of 2020. Unfortunately, the 2020 recession has had a disparate impact on households, with those in oil and hospitality industries especially hard hit. However, the recent rebound in employment has helped some struggling homeowners begin to make payments again.

“The consistent decline in serious delinquency since August is a sign of growing financial stability for families,” said Frank Martell, president and CEO of CoreLogic. “In addition to ensuring that homeowners stay in their homes, the decline in delinquency means fewer distressed sales, which is both a positive for individual households and the overall housing market.”

“Urban areas hit hard by the pandemic recession or by a natural disaster experienced the largest spike in delinquency over the last year,” said Dr. Frank Nothaft, chief economist at CoreLogic. “Forbearance and loan modification helped struggling families rebuild their financial house in hard-hit places. While vaccination will mitigate the pandemic, the best cure for delinquency is income restoration through job creation.”

State and Metro Takeaways:

• Every state logged an annual increase in overall delinquency rates in November.
• Hawaii (up 4.3 percentage points) and Nevada (up 4.2 percentage points) topped the list for gains.
• Nearly all U.S. metro areas logged an increase in overall delinquency rates in November compared with one year earlier.
• Odessa, Texas, experienced the largest annual increase with 9.5 percentage points, likely due to significant job loss in the oil industry.
• Other metro areas with significant increases included Lake Charles, Louisiana (up 9.1 percentage points); Midland, Texas (up 7.4 percentage points) and Kahului, Hawaii (up 7.2 percentage points).

Source: CoreLogic