Residential Real Estate News
Foreclosure Rate in U.S. at Lowest Pace in 20 Years
Based on CoreLogic's June 2021 Loan Performance Insights Report, 4.4% of all mortgages in the U.S. were in some stage of delinquency (30 days or more past due, including those in foreclosure).
This represents a 2.7-percentage point decrease in delinquency compared to June 2020, when it was 7.1%. Despite the positive trend, overall delinquencies remain above the February 2020, pre-pandemic rate of 3.6%.
To gain an accurate view of the mortgage market and loan performance health, CoreLogic examines all stages of delinquency. In June 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): 1.1%, down from 1.8% in June 2020.
- Adverse Delinquency (60 to 89 days past due): 0.3%, down from 1.8% in June 2020.
- Serious Delinquency (90 days or more past due, including loans in foreclosure): 3%, down from 3.4% in June 2020. While still high, this is the tenth consecutive month of declines, and the lowest serious delinquency rate since May 2020.
- Foreclosure Inventory Rate (the share of mortgages in some stage of the foreclosure process): 0.2%, down from 0.3% in June 2020. This is the lowest foreclosure rate recorded since CoreLogic began recording data (1999).
- Transition Rate (the share of mortgages that transitioned from current to 30 days past due): 0.6%, down from 1% in June 2020.
In June, the federal foreclosure moratorium was extended once more through July 31, 2021 to provide homeowners additional time to get financially back on track. The moratorium has helped move the foreclosure rate to a new generational low. However, a CoreLogic survey of mortgage holders found that nearly half (43%) of respondents said they do not understand government mortgage relief programs, which could be contributing to higher overall delinquency rates.
"The downward trend in delinquencies, especially serious cases, is very encouraging -- and a testimony to the impact of the significant economic rebound over the past six months, as well as government stimuli, record-low mortgage rates and loan modification options," said Frank Martell, president and CEO of CoreLogic. "Providing resources to homeowners experiencing distress to help educate them on available government and private-sector support will aid in shrinking delinquency and foreclosure rates even more over the remainder of this year."
"While job and income growth has helped to push delinquency rates down, there are many families that remain in financial distress," said Dr. Frank Nothaft, chief economist at CoreLogic. "More than one million borrowers had missed six or more payments as of June, triple the number of borrowers pre-pandemic. CoreLogic analysis found that as of June 2021, borrowers in forbearance and behind on mortgage payments had missed an average of 10 monthly payments."
State and Metro Takeaways:
- In June, all U.S. states logged a decrease in annual overall delinquency rates, with New Jersey (down 4.8 percentage points), New York (down 4.4 percentage points) and Florida (down 4.1 percentage points) leading with the largest declines.
- All U.S. metros also posted an annual decrease in overall delinquency rates in June, with Miami (down 6.6 percentage points), Laredo, Texas (down 5.7 percentage points) and Kingston, New York (down 5.6 percentage points) posting the largest decreases.
- Nevertheless, elevated overall delinquency rates remain in some metros, including Odessa (11.1%) and Laredo (10.7%), Texas; Vineland, New Jersey (10.6%); and Pine Bluff, Arkansas (10.4%).
