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According to Intercontinental Exchange, Inc (ICE) data (formerly Black Knight), the national delinquency rate rose to 3.29% in September, up 12 basis points (BPS) from August and up 13BPS year over year, marking only the second—and largest—annual increase in the past 2.5 years.
Despite the rise in delinquencies, the delinquency rate is still 71 points below September 2019, before the COVID-19 pandemic. Loans that were at least 30 days overdue rase by 5.1% (or 48,800 loans) which marks the fourth month of consecutive rises while the 60-day delinquent population extended its own streak of increases by rising 3% (or 8,700 loans) marking six months of increases.
At the national level, serious delinquencies (90 or more days past due) rose by 7,000 to 455,000, but remain 6.7% below September 2019 levels.
While overall delinquencies have risen, the number of loans in active foreclosure fell to 214,000 in September, its lowest point since March 2022 and some 25% below 2019 pre-pandemic levels.
Foreclosure starts also declined, falling by 20.4% in September to 25,400, with completed sales falling by 8% from the month prior.
By the numbers:
Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 3.29%
Month-over-month change: 3.67%
Year-over-year change: 4.27%
Total U.S. foreclosure pre-sale inventory rate: 0.40%
Month-over-month change: -0.41%
Year-over-year change: -7.18%
Total U.S. foreclosure starts: 25,000
Month-over-month change: -20.45%
Year-over-year change: 4.81%
Monthly prepayment rate (SMM): 0.45%
Month-over-month change: -15.51%
Year-over-year change: -25.74%
Foreclosure sales: 6,400
Month-over-month change: -7.52%
Year-over-year change: -6.42%
Number of properties that are 30 or more days past due, but not in foreclosure: 1,749,000
Month-over-month change: 64,000
Year-over-year change: 96,000
Number of properties that are 90 or more days past due, but not in foreclosure: 455,000
Month-over-month change: 7,000
Year-over-year change: -132,000
Number of properties in foreclosure pre-sale inventory: 214,000
Month-over-month change: -1,000
Year-over-year change: -13,000
Number of properties that are 30 or more days past due or in foreclosure: 1,963,000
Month-over-month change: 64,000
Year-over-year change: 83,000
Top five States by Non-Current Percentage:
Mississippi: 7.92 %
Louisiana: 7.40 %
Alabama: 5.63 %
Indiana: 5.12 %
Pennsylvania: 5.04 %
Bottom Five States by Non-Current Percentage:
California: 2.15
Idaho: 2.13 %
Montana: 2.05 %
Washington: 2.01 %
Colorado: 1.95 %
Top Five States by 90+ Days Delinquent Percentage:
Mississippi: 2.16 %
Louisiana: 1.85 %
Alabama: 1.46 %
Arkansas: 1.21 %
Georgia: 1.19 %
Top Five States by 12-Month Change in Non-Current Percentage:
Rhode Island: -9.28 %
Alaska: - 6.73 %
Connecticut: -4.36 %
District of Columbia: -4.16 %
New York: -3.99 %
Bottom Five States by 12-Month Change in Non-Current Percentage:
Idaho: 16.65 %
South Dakota: 13.18 %
Hawaii: 13.10 %
Louisiana: 10.53 %
Arizona: 8.98 %
Donna Schmidt, the Managing Director for DLS Servicing commented on the report:
"With the increase in property values, the foreclosure rate remains muted because borrowers in default can sell their homes to recapture their equity," Schmidt said. "The workout options offered by the GSE and government insurers work best in a low-interest rate environment. But when rates are as high as they are, it exhausts the workout flexibility in one reinstatement."
"For example, the target is to lower the borrower’s payment with a combination of interest rate adjustments, term extensions and principal deferments. Payment relief is easier in a lower interest rate environment – but when rates are high, the need for more principal deferment increases," Schmidt continued. "All entities limit the amount of principal deferment to 30% of the unpaid principal balance. We are seeing more workouts exhaust the 30% limit in just one workout attempt – leaving borrowers with nothing left to assist them in a future default."
"This means that we will eventually see an uptick in defaults and more homes on the market to avoid foreclosure," Schmidt concluded. "It depends if this increase will happen slowly over time, or if recessionary pressures will lead to a faster pace. If faster, then we should see a stabilization and even reduction in home prices is some markets. Time will tell."
Click here to view the report in its entirety.
