Due to forbearance plans, home foreclosures are at record lows, but skyrocketing serious-delinquency rates point to a rough road ahead. That is, according to CoreLogic, provider of property-data analysis, which just released its monthly Loan Performance Insights [1] report for August. It showed, nationally:
- Overall delinquency rate for August was 6.6%.
- The rate for early-stage delinquencies (30 to 59 days past due) was 1.6%, down from 1.8% in August 2019.
- The share of mortgages 60 to 89 days past due was .8%, up from .6% in August 2019.
- The serious delinquency rate(90 days or more past due, including loans in foreclosure) was 4.3%, up from 1.3% in August 2019.
- This is the highest serious delinquency rate since February 2014.
- As of August 2020, the foreclosure inventory rate was .3%, down from .4% in August 2019.
“Five months into the pandemic, the 150-day delinquency rate for August spiked to 1.2%. This was the highest rate in more than 21 years and double the January 2010 peak during the home-price bust," said Frank Nothaft Chief Economist for CoreLogic."The spike in delinquency was all the more stunning given the generational low of 0.08% in March and April.”
Homeowners approaching the end of the initial 180-day grace period, which is afforded to those with federally-backed mortgages, can now request an additional 180 days, and that, according to the report, is keeping foreclosures low as serious delinquency climbs. However, the researchers say that "looming unpaid mortgage payments, paired with sharp declines in income for many families, point to a potential wave of home sales triggered by financial distress in 2021 as forbearance periods end. "
Adds Nothaft, "Forbearance programs continue to reduce the flow of homes into foreclosure and distressed sales and has been the key to helping many families who have been particularly hard hit by the pandemic. Even though foreclosure rates are at a historic low, the spike in 150-day past-due loans points to bumpy waters ahead.”
New Jersey, New York, Nevada, Florida, and Hawaii are recording the highest overall delinquency rates, the report shows.