Mortgage delinquency rates plunge to lowest since before Great Recession

IRVINE
November 14, 2017 5:30am
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•  Mortgage delinquencies, foreclosures are down year-over-year

•  Central Valley sees drops greater than national average


Nationally, 4.6 percent of mortgages were in some stage of delinquency (30 days or more past due including those in foreclosure) in August, a 0.6 percentage point year-over-year decline from August 2016 when it was 5.2 percent, according to a new report released Tuesday by real estate financial information company CoreLogic Inc. (NYSE: CLGX) of Irvine.

As of August, the national foreclosure inventory rate, which measures the share of mortgages in some stage of the foreclosure process, was 0.6 percent, down from 0.9 percent in August 2016. This was the lowest foreclosure inventory rate for the month of August in 11 years since August 2006 when it was 0.5 percent.

Some Central Valley markets, once the epicenter of the nation’s housing collapse, are seeing declines in problem mortgages at rates larger than the national average. Here are CoreLogic’s summaries:

• In Stockton-Lodi, 3.5 percent of mortgages were delinquent by at least 30 days (including those in foreclosure) in August compared with 4.0 percent in August 2016, representing a decrease of 0.5 percentage points. Stockton-Lodi mortgages in serious delinquency (90+ days past due) totaled 1.1 percent in August compared with 1.4 percent in August 2016. The foreclosure inventory rate for this August was 0.3 percent compared with 0.4 percent a year earlier.

• In Bakersfield, 4.9 percent of mortgages were delinquent by at least 30 days (including those in foreclosure) in August compared with 5.3 percent in August 2016, representing a decrease of 0.4 percentage points. Bakersfield mortgages in serious delinquency (90+ days past due) totaled 1.7 percent in August compared with 2.0 percent in August 2016. The foreclosure inventory rate for this August was 0.5 percent compared with 0.6 percent a year earlier.

• In Visalia-Porterville, 4.9 percent of mortgages were delinquent by at least 30 days (including those in foreclosure) in August compared with 5.1 percent in August 2016, representing a decrease of 0.2 percentage points. Visalia-Porterville mortgages in serious delinquency (90+ days past due) totaled 1.5 percent in August compared with 1.7 percent in August 2016. The foreclosure inventory rate for this August was 0.3 percent compared with 0.5 percent a year earlier.

• In metro Sacramento, 2.5 percent of mortgages were delinquent by at least 30 days (including those in foreclosure) in August compared with 2.8 percent in August 2016, representing a decrease of 0.3 percentage points. Metro Sacramento mortgages in serious delinquency (90+ days past due) totaled 0.9 percent in August compared with 1.1 percent in August 2016. The foreclosure inventory rate for this August was 0.2 percent compared with 0.3 percent a year earlier.

• In Modesto, 3.4 percent of mortgages were delinquent by at least 30 days (including those in foreclosure) in August compared with 3.9 percent in August 2016, representing a decrease of 0.5 percentage points. Modesto mortgages in serious delinquency (90+ days past due) totaled 1.0 percent in August compared with 1.4 percent in August 2016. The foreclosure inventory rate for this August was 0.3 percent compared with 0.4 percent a year earlier.

• In Merced, 3.5 percent of mortgages were delinquent by at least 30 days (including those in foreclosure) in August compared with 4.0 percent in August 2016, representing a decrease of 0.5 percentage points. Merced mortgages in serious delinquency (90+ days past due) totaled 1.0 percent in August compared with 1.3 percent in August 2016. The foreclosure inventory rate for this August was 0.3 percent compared with 0.4 percent a year earlier.

• In Madera, 4.4 percent of mortgages were delinquent by at least 30 days (including those in foreclosure) in August compared with 4.7 percent in August 2016, representing a decrease of 0.3 percentage points. Madera mortgages in serious delinquency (90+ days past due) totaled 1.6 percent in August compared with 1.7 percent in August 2016. The foreclosure inventory rate for this August was 0.5 percent compared with 0.5 percent a year earlier.

• In Fresno, 4.1 percent of mortgages were delinquent by at least 30 days (including those in foreclosure) in August compared with 4.5 percent in August 2016, representing a decrease of 0.4 percentage points. Fresno mortgages in serious delinquency (90+ days past due) totaled 1.3 percent in August compared with 1.6 percent in August 2016. The foreclosure inventory rate for this August was 0.3 percent compared with 0.5 percent a year earlier.

Measuring early-stage delinquency rates is important for analyzing the health of the mortgage market, CoreLogic says. To monitor mortgage performance comprehensively, it says it examines all stages of delinquency as well as transition rates, which indicate the percentage of mortgages moving from one stage of delinquency to the next.

The rate for early-stage delinquencies, defined as 30-59 days past due, was 2 percent in August, down slightly from 2.1 percent in August 2016. The share of mortgages that were 60-89 days past due in August was 0.7 percent, unchanged from August 2016. The serious delinquency rate (90 days or more past due) declined 0.5 percentage points year over year from 2.4 percent in August 2016 to 1.9 percent in August. The 1.9 percent serious delinquency rate in June, July and August of this year marks the lowest level for any month since October 2007 when it was also 1.9 percent, and is also the lowest for the month of August since 2007 when the serious delinquency rate was 1.7 percent. Alaska was the only state to experience a year-over-year increase in its serious delinquency rate in August.

"The effect of the drop in crude oil prices since 2014 has taken a toll on mortgage loan performance in some markets," says Frank Nothaft, chief economist for CoreLogic. "Crude oil prices this August were less than half their level three years ago. This has led to oil-related layoffs and an increase in loan delinquency rates in states like Alaska and in oil-centric metro areas like Houston."

Since early-stage delinquencies can be volatile, CoreLogic says it also analyzes transition rates. The share of mortgages that transitioned from current to 30-days past due was 0.9 percent in August, unchanged from August 2016. By comparison, in January 2007 just before the start of the financial crisis, the current-to-30-day transition rate was 1.2 percent and it peaked in November 2008 at 2 percent.

"Serious delinquency and foreclosure rates are at their lowest levels in more than a decade, signaling the final stages of recovery in the U.S. housing market," says Frank Martell, president and CEO of CoreLogic. "As the construction and mortgage industries move forward, there needs to be not only a ramp up in homebuilding, but also a focus on maintaining prudent underwriting practices to avoid repeating past mistakes."


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