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Delinquencies on the Decline

past-due-mortgage-threeAccording to the latest installment of CoreLogic’s monthly Loan Performance Insights Report, nationally 5.3 percent of mortgages were in some stage of delinquency during December 2017. That figure includes mortgages in foreclosure. The total is exactly the same percentage as a year prior in December 2016.

The foreclosure inventory rate—a measure of the share of mortgages in some stage of the foreclosure process—was down in December, dropping from 0.8 percent to 0.6 percent year-over-year. That 0.6 percentage has actually been holding steady since August 2017, holding fast at the lowest foreclosure inventory rate since June 2007. The December 2017 rate was also the lowest December percentage since December 2006.

December’s early-stage delinquency (between 30-59 days past due) rate clocked in at 2.3 percent, 0.1 percentage points above both November 2017 and December 2016. For delinquencies between 60-89 days past due, the December rate was 0.8 percent, down from 0.9 percent in November 2017 but up slightly over December 2016’s 0.7 percent. Serious delinquencies (90+ days overdue) came in at 2.1 percent, compared to 2.3 percent in December 2016. December 2017’s serious delinquency rate was the lowest for the month of December since December 2006.

Dr. Frank Nothaft, CoreLogic’s Chief Economist, explained that, even months later, delinquency rates are still feeling the effects of last year’s natural disasters. “The wildfires in Sonoma and Napa counties began October 8 and destroyed or damaged thousands of homes. Two- and three-month delinquency rates have spiked in these two counties, more than doubling between October and December. The aftereffects of Hurricanes Harvey, Irma, and Maria continue to appear as well. Serious delinquency rates in the Houston and Miami metropolitan areas doubled between September and year-end and quadrupled in the San Juan area of Puerto Rico.”

CoreLogic also reports on transition rates as mortgages pass from one stage of delinquency to another. The transition rate for mortgages moving from current to 30 days past due was 1.1 percent in December 2017. That transition rate peaked in November 2008 at 2 percent.

“The effect of the wildfires and hurricanes on delinquency transition rates was all too clear in our latest analysis,” said Frank Martell, President and CEO of CoreLogic. “In Sonoma and Napa counties, both 30-to-60 day and 60-to-90 day delinquent transition rates in December were more than double what they had averaged the prior year. Likewise, neighborhoods affected by hurricanes have seen a jump in transition rates in the months immediately following. These natural disasters have stalled or reversed the decline in 30-to-119 day delinquency rates that we had seen previously.”

About Author: David Wharton

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