Foreclosures Hit 12-Year Low—but Disasters Could Reverse the Trend
Delinquent mortgages are unwinding, and foreclosures hit a 12-year low this summer, according to a new report.
In July, just 4.1 percent of mortgages nationwide were past due, CoreLogic’s latest Loan Performance Insights Report shows, and 0.5 percent were in foreclosure—the latter the lowest share since 2006.
According to the report:
•9 percent of mortgages were 30-59 days delinquent, down from 2.1 percent the prior year;
•6 percent were 60-89 days delinquent, down from 0.7 percent the prior year; and
•6 percent were 90 days or more delinquent, down from 1.9 percent the prior year.
The boost in employment is influencing the lower rates, according to Frank Nothaft, chief economist at CoreLogic.
“With the national unemployment rate remaining below 4 percent since July, further declines in U.S. delinquency rates are likely in coming months,” says Nothaft.
CoreLogic anticipates, however, that delinquencies will mount in areas where disaster has struck. According to early estimates, Florence was set to damage 487,000 homes across the Carolinas and Virginia—that number has since swelled. Hawaiian homes by the hundreds were impacted by the volcano, and countless homes are irreparable after the storms in 2017. Hurricane Michael, which devastated the Florida Panhandle last week, could contribute to the delinquency rate, as well.
“The destruction of homes and disruption to local commerce caused by natural disasters lead to a subsequent spike in local delinquency rates, even for homes that were untouched,” Nothaft says.
“Despite an overall sunny picture of delinquencies, weather-driven hotspots dot the country,” adds Frank Martell, CEO/president of CoreLogic. “We expect higher delinquency rates in the Mid-Atlantic region later this year due to Hurricane Florence, which impacted nearly half a million homes in North Carolina alone.
“We also see increases in serious delinquency rates in Florida and Texas reflecting the damage of Hurricanes Harvey and Irma,” Martell says. “In addition, Hawaii will likely experience an increase in delinquency rates as a result of Hurricane Lane and the eruption of Kilauea.”