Clouds on the horizon for many U.S. homeowners: Overall failure rates are starting to climb, according to CoreLogic Loan Performance Insights report
IRVINE, Calif .– (COMMERCIAL THREAD) – CoreLogic® (NYSE: CLGX), a leading global provider of real estate information, analytics and data-driven solutions, today released its monthly Loan Performance Insights report. for May 2020. Nationally, 7.3% of mortgages were in some stage of default (30 days or more past due, including those in foreclosure). This represents a 3.7 percentage point increase in the overall delinquency rate from 3.6% in May 2019.
To get an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency, including the portion that goes from current to 30 days past due. As of May 2020, the delinquency and transition rates in the United States, as well as their year-to-year variations, were as follows:
- Early delinquency (30 to 59 days late): 3%, compared to 1.7% in May 2019.
- Unwanted delinquency (60 to 89 days late): 2.8%, compared to 0.6% in May 2019.
- Serious delinquency (90 days or more past due, including foreclosed loans): 1.5%, up from 1.3% in May 2019. This is the first year-over-year increase in the serious delinquency rate since November 2010.
- Foreclosure inventory rate (the share of mortgages at some stage of the foreclosure process): 0.3%, up from 0.4% in May 2019. This is the second consecutive month that the foreclosure rate in the United States was at its peak. lowest level since at least January 1999.
- Transition rate (the share of mortgages that went from current maturities to 30 days): 2.2%, compared to 0.8% in May 2019. By comparison, in January 2007, just before the onset of the financial crisis, the rate transition was 1.2%, while it peaked in November 2008 at 2%.
In the months leading up to the pandemic, mortgage performance in the United States was showing signs of sustained improvement. The national unemployment rate hit a 50-year low in February, and overall delinquency had fallen dramatically for 27 consecutive months. However, in May 2020 – just two months after the coronavirus (COVID-19) was declared a global pandemic – U.S. unemployment topped 13%, leaving more than 4 million homeowners (accounting for over 8% of all loans mortgage) no choice but to participate in a COVID-19 mortgage forbearance program.
“The national unemployment rate went from a 50-year low in February 2020 to an 80-year high in April,” said Dr Frank Nothaft, chief economist at CoreLogic. “With the sudden loss of income, many homeowners are struggling to get their mortgages under control, leading to an increase in non-payments. ”
In the absence of additional government programs and support, CoreLogic predicts that the serious delinquency rate in the United States will quadruple by the end of 2021, pushing 3 million homeowners into serious delinquency.
“Government and industry relief programs have helped cushion the initial financial blow of the pandemic for millions of US homeowners,” said Frank Martell, president and CEO of CoreLogic. “COVID-19 and the resulting pressures continue to influence the economic activity of many households. Unless further intervention by federal and state governments, we are likely to see significant spikes in crime in the short to medium term. ”
All states recorded increases in overall delinquency rates in May compared to the previous year. New Jersey and Nevada, both still hotspots for the virus, recorded the largest overall gains in delinquency with increases of 6.4 percentage points each in May, compared to a year earlier. New York again topped the list with an increase of 6.1 percentage points, while Florida recorded a gain of 5.8 percentage points.
At the metropolitan level, nearly all metropolitan areas in the United States posted at least a slight annual increase in their overall delinquency rate, with tourist destinations such as Miami, Florida (up 9.2 percentage points) and Kahului, Hawaii (up 8.8 percentage points), posting two of the biggest increases. Odessa, Texas, which has a local economy heavily tied to the petroleum industry, also saw a dramatic increase, posting an annual gain of 9 percentage points.
Meanwhile, more than 75% of all metropolitan areas have recorded at least a small increase in their serious delinquency rate. Odessa, Texas, and Laredo, Texas got the biggest increase with gains of 1.1 percentage points each. McAllen, Texas; Midland, Texas and Hattiesburg, Mississippi all followed with gains of 0.7 percentage points each.
To learn more about delinquency and foreclosure trends, join Dr Frank Nothaft and other leading mortgage experts from CoreLogic at their virtual panel discussion this Thursday, August 13, to discuss these various issues. Register for the webinar today here.
The next CoreLogic Loan Performance Insights report will be released on September 8, 2020, with data for June 2020. For current housing trends and data, visit the CoreLogic Insights blog: www.corelogic.com/insights.
Data in the CoreLogic LPI report represents foreclosure and delinquency activity reported through May 2020. The data in this report only represents first liens on a property and does not include secondary liens. Delinquency, transition, and foreclosure rates are measured only against homes that have an outstanding mortgage. Homes without mortgage privileges are not subject to foreclosure and are therefore excluded from the analysis. CoreLogic has approximately 75% US lockdown data coverage.
The data provided is intended for use only by the primary recipient or the publication or distribution of the primary recipient. This data may not be resold, republished, or licensed to any other source, including publications and sources owned by the primary recipient’s parent company without the prior written permission of CoreLogic. All CoreLogic data used for publication or distribution, in whole or in part, must come from CoreLogic, a data and analytics company. For use with broadcast or web content, the citation must directly accompany the first reference of the data. If the data is illustrated by maps, tables, graphs or other visual elements, the CoreLogic logo should be included on the screen or on the website. For any questions, analysis or interpretation of the data, contact Allyse Sanchez at email@example.com. The data provided cannot be modified without the prior written consent of CoreLogic. Do not use the data illegally. This data is compiled from public records, contributory databases and proprietary analyzes, and its accuracy depends on these sources.
CoreLogic (NYSE: CLGX), the leading provider of real estate information and solutions, promotes a healthy housing market and thriving communities. Through its enhanced real estate data solutions, services and technologies, CoreLogic enables real estate professionals, financial institutions, insurance companies, government agencies and other housing market players to help millions of people to find, buy and protect their homes. For more information, please visit www.corelogic.com.
CORELOGIC and the CoreLogic logo are trademarks of CoreLogic, Inc. and / or its subsidiaries. All other trademarks are the property of their respective owners.