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This episode reviews last week’s inauguration of President Joe Biden, examining which housing issues the new administration has already taken action on.

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Mortgage

Early-stage mortgage delinquencies rate hit highest level in 21 years in April

Overall delinquent mortgages at four-year high

In April 2020, 6.1% of mortgages were delinquent by at least 30 days or more, marking the nation’s highest overall delinquency rate since January 2016, according to a report by CoreLogic. Delinquent mortgages included the 0.3% foreclosure inventory – the lowest foreclosure rate for any month since January 1999.

The rate for early stage delinquencies (30-59 days past due) reached its highest level in 21 years at 4.2%, according to the report. The share of mortgages 60 to 89 days past due rose from 0.6% in April 2019 to 0.7% in 2020. The serious delinquency rate (90 days or more past due) was down to 1.2% from 1.3% year-over-year.

As of March, the nation’s overall delinquency rate declined for 27 consecutive months, and serious delinquency and foreclosure rates stood at record lows, the report said. However, as unemployment reached its highest level in more than 80 years in April, homeowners struggled to make monthly mortgage payments.  

“As the true impact of the economic shutdown during the second quarter of 2020 becomes clearer, we can expect to see a rise in delinquencies in the next 12-18 months – especially as forbearance periods under the CARES Act come to a close,” said Frank Martell, president and CEO of CoreLogic.

While several servicers including the FHA and the FHFA extended moratoriums for those in forbearance, the share of mortgages that transitioned from current to 30-days past due jumped to 3.4% in April 2020, up from 0.7% in April 2019 – the highest transition rate since January 1999.

Prior to the financial crisis in January 2007, the 30-day transition rate was 1.2% and only ever peaked in November 2008 at 2%, the report said.

According to CoreLogic data, all states logged increases in overall delinquency rates for April. New York and New Jersey — states that were hotspots for COVID-19 cases during that time — each gained nearly 5% since April 2019.

The metros that led the nation in overall delinquency gains year-over-year were as follows:

  • Miami – Up 6.7%
  • Kahului, Hawaii – Up 6.2%
  • New York City – Up 5.5%
  • Atlantic City, New Jersey – Up 5.4%
  • Las Vegas – Up 5.3%

Colorado and Alaska saw a small annual increase in serious delinquency rate at 0.1%

“With home prices expected to drop 6.6% by May 2021, thus depleting home equity buffers for borrowers, we can expect to see an increase in later-stage delinquency and foreclosure rates in the coming months,” the report said.

Comments

  1. Are loans in forbearance excluded from Corelogic’s early stage delinquency metric? So when loans come out of forbearance we are at risk of seeing that metric pop?

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