Early-Stage Mortgage Delinquencies Exceed Great Recession Levels in U.S.

According to CoreLogic's latest Loan Performance Insights Report for April 2020, 6.1 percent of U.S. mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure). This represents a 2.5-percentage point increase in the overall delinquency rate compared to March 2020, when it was 3.6 percent.

To gain an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency, including the share that transition from current to 30 days past due. In April 2020, 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): 4.2 percent, up from 1.7 percent in April 2019.

• Adverse Delinquency (60 to 89 days past due): 0.7 percent, up from 0.6 percent in April 2019.

• Serious Delinquency (90 days or more past due, including loans in foreclosure): 1.2 percent, down from 1.3 percent in April 2019. For the fifth consecutive month, the serious delinquency rate remained at its lowest level since June 2000.

• Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.3 percent, down from 0.4 percent in April 2019. This is the lowest foreclosure rate for any month since at least January 1999.

• Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 3.4 percent, up from 0.7percent in April 2019. This marks the highest transition rate since at least January 1999. In January 2007, just before the start of the financial crisis, the current- to 30-day transition rate was 1.2 percent, while it peaked in November 2008 at 2 percent.

In the months leading up to the coronavirus (COVID-19) pandemic, U.S. mortgage performance was showing sustained improvement. As of March, the nation's overall delinquency rate had declined for 27 consecutive months, and serious delinquency and foreclosure rates stood at record lows. However, unemployment reached its highest level in more than 80 years in April, reducing affected homeowners' ability to make monthly mortgage payments.

The CARES Act provided forbearance for borrowers with federally backed mortgage loans who were economically impacted by the pandemic. Borrowers in a forbearance program who have missed a mortgage payment are included in the CoreLogic delinquency statistics, even if the loan servicer has not reported the loan as delinquent to credit repositories. Early-stage delinquencies (30-59 days past due) reached its highest level in at least 21 years in April. With home prices expected to drop 6.6percent 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 resurgence of COVID-19 infections across the country has created economic uncertainty and leaves those who are unemployed concerned with their ability to make monthly mortgage payments," said Dr. Frank Nothaft, chief economist at CoreLogic. "The latest forecast from the CoreLogic Home Price Index predicts prices declining in all states through May 2021, erasing some home equity and increasing foreclosure risk."

All states logged increases in overall delinquency rates in April. New York and New Jersey were both hot spots for the virus and experienced the largest overall delinquency gains of 4.7 and 4.6 percentage points respectively in April, compared to one year earlier. Nevada, Florida and Hawaii were hit hard by the collapse in business travel and tourism, posting spikes of 4.5, 4.0 and 3.7 percentage points, respectively.

On the metro level, tourism destinations such as Miami, Florida (up 6.7 percentage points); Kahului, Hawaii (up 6.2 percentage points); New York, New York (up 5.5 percentage points); Atlantic City, New Jersey (up 5.4 percentage points) and Las Vegas, Nevada (up 5.3 percentage points), led the nation in overall delinquency gains.

"Despite the scale and suddenness of the pandemic, mortgage delinquency has yet to emerge as a major issue, thanks to government COVID-19 relief programs and other housing finance industry efforts," said Frank Martell, president and CEO of CoreLogic. "As the true impact of the economic shutdown during the second quarter of 2020 becomes clearer, we can expect to see a rise delinquencies in the next 12-18 months -- especially as forbearance periods under the CARES Act come to a close."