Delinquency was down in May compared to last year, according to the latest Loan Performance Insights Report from CoreLogic. In May 2018, delinquencies went down by 0.3 percent, falling to 4.2 percent compared to 4.5 percent in May 2017. Additionally, CoreLogic noted that the foreclosure inventory rate went down by 0.2 percent year over year, from 0.7 percent in May 2017 to 0.5 percent in May 2018.
While most of the country has experienced these declining delinquency rates, certain areas of California have seen increases in loans entering delinquency due to the recent wildfires, the report noted. CoreLogic estimates the potential costs of reconstruction in the city of Redding and the French Gulch community to be around $3.5 billion.
"While the strong economy has nudged serious delinquency rates to their lowest level in 12 years, areas hit by natural disasters have had increases," said CoreLogic Chief Economist Dr. Frank Nothaft. "The tragic wildfires in the West will likely lead to a spike in delinquencies in hard-hit neighborhoods."
Giving an example, Nothaft said that the wildfire in Santa Rosa last year destroyed or severely damaged more than 5,000 homes. Delinquency rates rose in the aftermath, and "in the ensuing months, we observed home-price growth accelerate and sales decline. We will likely see the same scenario unfold in fire-ravaged communities this year."
Alongside California, Florida and Texas have also seen increasing delinquency rates, due in part to the 2017 hurricane season. CoreLogic President and CEO Frank Martell noted that these states were outliers, as the rest of the country experiences lower-than-average delinquency rates.
"We have observed continued challenges for families to make mortgage payments in regions impacted during the 2017 hurricane season,” said Martell. “For the coming months, we will monitor mortgage and housing trends in areas now plagued by wildfires, particularly in California, Montana, and Arizona."
Read the full Loan Performance Insights report from CoreLogic here.