Mort­gage Fore­clo­sure Rates Hit a 12-Year Low

National Mortgage News - - Servicing - By Paul Cen­topani

The mort­gage delin­quency rate dropped on an an­nual ba­sis, a sign of a strength­en­ing econ­omy, but could soon see a spike due to this year’s wild­fires, ac­cord­ing to CoreLogic.

In May, the fore­clo­sure in­ven­tory rate reached 0.5%, its low­est depth for any month since Septem­ber 2006. Fore­clo­sure rates dipped 0.2 per­cent­age points from last year.

The share of mort­gages that tran­si­tioned from cur­rent to 30 days past due was 0.8% in May 2018, the same from a year be­fore. Early-stage delin­quen­cies (30-59 days past due) are a har­bin­ger for the state of the mort­gage mar­ket. The rate of early-stage delin­quen­cies also dropped, go­ing to 1.8% from 1.9% in May 2017.

The over­all mort­gage delin­quency rate in the U. S. sat at 4.2%, mark­ing a year- over-year de­cline of 0.3 per­cent­age points.

“While the strong econ­omy has nudged se­ri­ous delin­quency rates to their low­est level in 12 years, ar­eas hit by nat­u­ral dis­as­ters have had in­creases,” Frank Nothaft, chief econ­o­mist for CoreLogic, said in a press re­lease.

The im­pact of the wild­fires that roiled through­out the West­ern U.S. prob­a­bly hasn’t been felt yet. “The tragic wild­fires in the West will likely lead to a spike in delin­quen­cies in hard-hit neigh­bor­hoods,” Nothaft con­tin­ued.

“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,” he added.

Of course, hur­ri­canes are an­other nat­u­ral dis­as­ter that dou­bles as a ma­jor cul­prit to hous­ing dam­age and late mort­gage pay­ments.

“Se­ri­ous delin­quency rates con­tinue to re­main lower than a year ear­lier ex­cept in Florida and Texas, the hard­est-hit states dur­ing last year’s hur­ri­cane sea­son,” said Frank Martell, pres­i­dent and CEO of CoreLogic. “We have ob­served con­tin­ued chal­lenges for fam­i­lies to make mort­gage pay­ments in re­gions im­pacted dur­ing the 2017 hur­ri­cane sea­son.”

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