The U.S. Serious Delinquency Rate Fell to Lowest Level since June 2020

For the month of May, 4.7% of all mortgages in the U.S. were in some stage of delinquency (30 days or more past due, including those in foreclosure), representing a 2.6-percentage point decrease in delinquency compared to May 2020, when it was 7.3%. However, overall delinquencies are above the early 2020, pre-pandemic rate of 3.5%.

To gain an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency. In May 2021, the U.S. delinquency and transition rates, and their year-over-year changes, were as follows:

• Early-Stage Delinquencies (30 to 59 days past due): 1.2%, down from 3% in May 2020.
• Adverse Delinquency (60 to 89 days past due): 0.3%, down from 2.8% in May 2020.
• Serious Delinquency (90 days or more past due, including loans in foreclosure): 3.2%, up from 1.5% in May 2020. While still high, this is the lowest serious delinquency rate since an initial jump during the pandemic in June 2020.
• Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.3%, unchanged from May 2020.
• Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 0.7%, down from 2.2% in May 2020.

Many are concerned about a pending foreclosure crisis when government provisions lift. Fortunately, the average homeowner in forbearance has sizeable equity in their home, which has helped create an additional financial buffer for those struggling to make mortgage payments. Thanks to these strong equity gains, and the availability of loan modifications and federal resources, we expect most borrowers have had enough support to stave off a foreclosure wave. Additionally, a recent CoreLogic survey of mortgage holders reports 85% of respondents said they maintained employment through the pandemic, which has helped many homeowners avoid delinquency and prevented a broad-scale mortgage crisis.

“The pandemic has created many challenges but, in the case of delinquencies, the impacts have been relatively muted thanks to numerous government support programs and the sharp snapback in economic activity over the past several quarters,” said Frank Martell, president and CEO of CoreLogic. “Looking forward, we expect a robust economy and near-zero interest rates to hold delinquency levels at reasonable levels.”

“The rise in home prices has built a substantial home equity cushion for homeowners with a mortgage, reducing the risk of a foreclosure,” said Dr. Frank Nothaft, chief economist at CoreLogic. “The CoreLogic Home Price Index recorded an annual increase of 17% in June. This price rise builds home equity. For most borrowers in forbearance, the equity gain means they’ll still have some remaining — even if missed payments are added to their loan balance.”

State and Metro Takeaways:

• In May, all U.S. states and metro areas logged a decrease in annual overall delinquency rates, with New Jersey (down 4.8 percentage points), New York (down 4.2 percentage points) and Florida (down 4 percentage points) leading the pack with the largest state declines.
• The metros with the largest annual declines in overall delinquency rate also occurred in these states, in Miami (down 6.5 percentage points), Kingston, New York (down 5.5 percentage points) and Atlantic City, New Jersey (down 5.4 percentage points).
• Nevertheless, elevated overall delinquency rates remain in some metros, including Texas, (Odessa; Laredo), Arkansas (Pine Bluff) and New Jersey (Vineland).

Methodology

The data in The CoreLogic LPI report represents foreclosure and delinquency activity reported through May 2021. The data in this report accounts for only first liens against a property and does not include secondary liens. The delinquency, transition and foreclosure rates are measured only against homes that have an outstanding mortgage. Homes without mortgage liens are not subject to foreclosure and are, therefore, excluded from the analysis. CoreLogic has approximately 75% coverage of U.S. foreclosure data.

About the CoreLogic Consumer Housing Sentiment Study

3,000+ consumers were surveyed by CoreLogic via Qualtrics. The study is an annual pulse of U.S. housing market dynamics concentrated on consumers looking to purchase a home, consumers not looking to purchase a home, and current mortgage holder. The survey was conducted in April 2021 and hosted on Qualtrics. The survey has a sampling error of~3% at the total respondent level with a 95% confidence level.