Mortgage Delinquencies Rise in September on Hurricane Destruction

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The share of home mortgage loan payments that are 30 days or more past due fell from 5.2% in September 2016 to 5% in September 2017. The foreclosure inventory rate fell from 0.8% to 0.6% in the same period.

The share of mortgages that transitioned from current to 30 days past due was 1.3% in September 2017, up from 0.9% in August 2016. This year’s rate is slightly higher than the transition rate of 1.2% just before the housing crisis struck, but still well below the peak rate of 2% in November 2008.

The data were reported Tuesday by CoreLogic in its Loan Performance Insights report. Early-stage delinquencies, defined as 30 to 59 days past due, were trending higher in September 2017 at 2.4% compared with the year-ago rate of 2.1%. The share of mortgages that were 60 to 89 days past due in September 2017 was 0.7%, unchanged compared with last year’s rate. According to CoreLogic, measuring early-stage delinquency rates is important for analyzing the health of the mortgage market.

CoreLogic’s chief economist, Dr. Frank Nothaft, said:

September’s early-stage delinquency rate increased by 0.3 percent from a year ago, the largest increase since June 2009. This does not reflect a deterioration in credit, but rather the impact of the hurricanes in Texas, Florida and Puerto Rico. September’s early-stage delinquency transition rate rose to 2.6 percent in Texas and it rose to 3.2 percent in Florida, which is higher than the 1 percent that’s typical for both states. Texas and Florida’s early-stage delinquency transition rates in September are much lower than New Orleans in September 2005 when the transition rate reached 17.4 percent as a result of Hurricane Katrina.

Frank Martell, president and CEO of CoreLogic, added:

While natural hazard risk was elevated in 2017, the economic fundamentals that drive mortgage credit performance are the best in two decades. The combination of strong job growth, low unemployment rates, steady economic performance and prudent underwriting has led to continued improvement in mortgage performance heading into next year.

The states with the lowest 30-plus delinquency rate in September 2017 were North Dakota and Colorado (2.2%), Oregon (2.5%) and Montana and Washington (2.6%). The 30-plus delinquency rate was highest in Mississippi (8.7%), Louisiana (8.2%), Florida (7.5%) and New York (7.1%).

The metro areas with the highest 30-plus delinquency rates in September were Houston (10.5%), Miami (9.6%) and New York City (6.9%). The metro areas with the lowest rates were San Francisco (1.8%), Denver (2.0%) and Los Angeles (2.8%).