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Gauging Defaults and Delinquencies

Mortgage delinquencies hit a year-end record low at the end of 2018 while the national foreclosure rate was the lowest rate recorded at year-end since 2005, according to Black Knight’s “First Look,” a precursor to its Mortgage Market Monitor, which will be released in early February.

In December 3.9 percent of mortgages in the United States were delinquent—at least 30 days past due but not in foreclosure yet. Although this is up 4.71 percent from the month earlier, it is down a significant 17.55 percent from a year ago.

The national foreclosure rate was a slight 0.52 percent in December. Like the delinquency rate this was higher than last month but lower than a year earlier. The foreclosure rate rose 1.19 percent over the month but had fallen 19.23 percent over the year in December.

In total, 46,300 properties went into foreclosure over the month of December, up 2.43 percent from November and up 4.04 percent from the previous December.

Black Knight attributed the uptick in foreclosure starts over the year in December to “suppressed foreclosure start volumes in late 2017 due to hurricane-related moratoriums.”

The states with the greatest percentage of non-current loans, which includes both delinquent loans and those in the foreclosure process, were Mississippi (10.09 percent), Louisiana (8.13 percent), Alabama (6.95 percent), West Virginia (6.69 percent), and Arkansas (6.29 percent). Despite ranking highest for non-current loans, all of these states experienced declines in non-current loan rates over the year in December, and they remain below their previous peaks, according to Black Knight’s data.

The states with the smallest percentage of non-current mortgage loans were North Dakota (2.46 percent), Idaho (2.32 percent), Washington (2.28 percent), Oregon (2.12 percent), and Colorado (1.90 percent).

Florida experienced the greatest decline in non-current loans over the six-month period ending in December with a 12.37 percent decline. Florida’s non-current loan rate now stands at 4.94 percent, which is less than one-fifth its peak of 25.23 percent reached in January 2010.

Following Florida in terms of declining non-current loan rates were Wyoming, Tennessee, Alaska, and Utah.

The greatest increases in the percentage of non-current loans took place in the District of Columbia (20.96 percent), Nebraska (20.38 percent), Illinois (18.52 percent), Arkansas (11.15 percent), and North Carolina (10.53 percent). Despite these double-digit increases in non-current loans over the second half of 2018, the non-current loan rates in all of these states remain well below their former peaks reached between 2010 and 2012.

Black Knight also noted that prepayments held steady at their 10-year low reached in November.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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