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Delinquency Rate Doubles Great Recession Peak

foreclosureIn July 2020, 6.6% of mortgages in the U.S. were delinquent by 30 days or more including those in foreclosure; this represents a 2.8-percentage point increase in the overall delinquency rate compared with July 2019.

The CoreLogic Loan Performance Insights report measures mortgage performance through July, and is available in full here (upon login).

"Measuring early-stage delinquency rates is important for analyzing the health of the mortgage market. To more comprehensively monitor mortgage performance, CoreLogic examines all stages of delinquency as well as transition rates that indicate the percent of mortgages moving from one stage of delinquency to the next," the company noted. To that end, it broke down delinquencies by stages:

  • 30-59 days (early delinquent) 1.5% in July 2020, down from 1.8% last July.
  • 60 to 89 days: up 1% from 0.6% in July 2019.
  • 90+ days (seriously delinquent): 4.1%, up from 1.3% in July 2019. "This is the highest serious delinquency rate since April 2014," CoreLogic reported.
  • Mortgages that transitioned from current to 30-days past due: 0.8% in July 2020, unchanged from July 2019. "The transition rate has slowed since April 2020, reports CoreLogic, when it peaked at 3.4%.

Furthermore, “Four months into the pandemic, the 120-day delinquency rate for July spiked to 1.4%,” said Dr. Frank Nothaft, Chief Economist at CoreLogic. “This was the highest rate in more than 21 years and double the December 2009 Great Recession peak. The spike in delinquency was all the more stunning given the generational low of 0.1% in March.”

CoreLogic reports that, despite home values (measured by the CoreLogic Home Price Index) rising at an accelerated rate, "unemployment levels in hard-hit areas remain stubbornly high, leaving some borrowers house-rich but cash poor.

"Despite the slow reopening of several sectors of the economy, recovery for other industries like entertainment, tourism, oil and gas have a more uncertain outlook for the remainder of 2020. With persistent job market and income instability, Americans continue to tap into savings to stay current on their home loans. But as savings run out, borrowers could be pushed further down the delinquency funnel. "

COVID-19 hotspots continue to suffer the most economic fallout, CoreLogic reports, with Nevada, New Jersey, New York, Hawaii, and Florida topping the states with the highest overall delinquencies.

For more details, methodology, and to see which states are most heavily impacted by the current recession, visit CoreLogic.

About Author: Christina Hughes Babb

Christina Hughes Babb is a reporter for DS News and MReport. A graduate of Southern Methodist University, she has been a reporter, editor, and publisher in the Dallas area for more than 15 years. During her 10 years at Advocate Media and Dallas Magazine, she published thousands of articles covering local politics, real estate, development, crime, the arts, entertainment, and human interest, among other topics. She has won two national Mayborn School of Journalism Ten Spurs awards for nonfiction, and has penned pieces for Texas Monthly, Salon.com, Dallas Observer, Edible, and the Dallas Morning News, among others.
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