Foreclosure Rate Fell to 4.3% in June

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Foreclosure Rate Fell to 4.3% in June

Irvine, CA, September 11, 2018-Nationally, 4.3% of mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure) in June 2018, representing a 0.3 percentage point decline in the overall delinquency rate compared with June 2017, when it was 4.6%, according to the CoreLogic Loan Performance Insights Report.

As of June 2018, the foreclosure inventory rate-which measures the share of mortgages in some stage of the foreclosure process-was 0.5%, down 0.2 percentage points from 0.7% in June 2017. The June 2018 foreclosure inventory rate was the lowest since September 2006, when it was also 0.5% and was the lowest for June since 2006.

The rate for early-stage delinquencies-defined as 30 to 59 days past due-was 2% in June 2018, unchanged from June 2017. The share of mortgages that were 60 to 89 days past due in June 2018 was 0.6%, also unchanged from June 2017. The serious delinquency rate-defined as 90 days or more past due, including loans in foreclosure-was 1.7% in June 2018, down from 1.9% in June 2017. This serious delinquency rate is the lowest for June since 2007 when it was 1.6% and the lowest for any month since August 2007 when it was also 1.7%.

Since early-stage delinquencies can be volatile, CoreLogic also analyzes transition rates. The share of mortgages that transitioned from current to 30 days past due was 0.9% in June 2018, unchanged from 0.9% in June 2017. By comparison, in January 2007, just before the start of the financial crisis, the current-to-30-day transition rate was 1.2%, while it peaked in November 2008 at 2%.

“A solid labor market enables more homeowners to remain current on their mortgage,” said Dr. Frank Nothaft, chief economist for CoreLogic. “The national unemployment rate in June 2018 was 4%, the lowest for June in 18 years. While this has helped reduce delinquencies nationally, delinquency rates in areas hit by wildfires, hurricanes or other natural disasters have jumped as families deal with financial disruption and tragedy. The loss of housing and displacement of families also tends to drive up local rents and reduce vacancies.”

Florida and Texas, two states impacted by hurricanes in 2017, have posted annual gains in overall delinquency rates. As illustrated in a recent video blog from Dr. Frank Nothaft, the risk to mortgages in the months following a natural hazard can be substantial. After last year’s trio of hurricanes-Harvey, Irma and Maria-serious delinquency rates on home mortgages tripled in the Houston, Texas, and Cape Coral, Florida, metro areas and quadrupled in San Juan, Puerto Rico.

“Due to last year’s hurricane season, Florida and Texas experienced increases in serious delinquency rates over the past year,” said Frank Martell, president and CEO of CoreLogic. “Neighborhoods impacted by similar disasters in 2018 should also expect to see a spike in delinquencies in the coming year. With storms and wildfires currently impacting multiple areas of the country, homeowners, lenders and servicers should remain vigilant of potential impacts, particularly those in California, Hawaii and the Rocky Mountain and Gulf Coast states.”