September Delinquencies Mostly Unaffected by Disasters, Eased Underwriting

News

CoreLogic reports that mortgage delinquency rates were little changed in
September.
  The percentage of mortgage
loans that were 30 or more days delinquent and including those in the process
of foreclosure declined by 0.6 percentage point on an annual basis, to a
national rate of 4.4 percent. Early delinquencies, those 30 to 59 days past due
were down from 2.4 percent in September 2017 to 2.2 percent.  Other delinquency rates are reflected in the graphic
below.

Serious delinquencies, those more than 90 days past due or in foreclosure were
either down or unchanged in every state. 
Rates however increased in 10 metro areas.

The improvements were despite the considerable disruption along the southern
Atlantic Coast caused by Hurricane Florence in September.  Seven of the eight metropolitan areas that experienced
the highest annual gains in delinquency rates were in North Carolina and South Carolina.
In Wilmington, North Carolina the 30-day delinquency rate jumped more than 2
points to 3.8 percent between August and September and was up 1.6 point
year-over-year.  That put it in a tie for
first place with the eighth metro on the list, Grand Rapids, Michigan.  CoreLogic says data over the next few months
will shed more light on Florence’s effect on loan performance . 

Frank Nothaft, CoreLogic’s Chief Economist said, “The effects of 2018’s
natural disasters have begun to show clearly in our delinquency data.  After Kilauea’s eruption began in May, serious
delinquency rates jumped on the Big Island by 10 percent between June and
September, while falling by 4 percent in the rest of Hawaii.  The Carr Fire began late July, and the 30- or
60-day delinquency rate in the Redding metro area jumped 19 percent from August
to September.  This was the largest
monthly spike up in this delinquency metric since July 2006 when the
foreclosure crisis was beginning. 
Additionally, 30-day delinquency rates doubled in major metros in North
Carolina in September, the first month after Hurricane Florence reached
landfall.”

The report also doesn’t yet reflect any upcoming impact from two other
natural disasters
, Hurricane Michael, which caused significant damage in the
Florida Panhandle and southeastern Georgia, and the deadly late fall wildfires
in California.

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 share of mortgages that transitioned from current to 30-days past
due was1.2 percent in September 2018, down 1.2 percentage point from the
previous September
.  By comparison, in
January 2007, just before the start of the financial crisis, the
current-to-30-day transition rate was 1.2 percent and peaked in November 2008
at 2 percent.

Frank Martell, President and CEO summed up the month’s report. “Outside of
areas affected by natural disasters, serious delinquency and foreclosure rates
have declined steadily across the nation as the labor market has improved and
home prices have risen.  However, we have
also seen a rise in high loan-to-value and high debt-to-income lending in our
CoreLogic TrueStandings data, heightening the risk of a significant upturn in
loan default if the economy slips into recession or home prices decline.”

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