"Some owners struggle to remain current after forbearance and loan modification"
The overall mortgage delinquency rate in the US fell to a new record low in January, according to a report released by CoreLogic.
The share of mortgages in some stage of delinquency (30 days or more past due, including those in foreclosure) dropped 2.3% year over year to 3.3% in January. According to CoreLogic, this marks the lowest recorded overall delinquency rate since at least January 1999.
“The drop in the nation’s overall mortgage delinquency rate in January marked the 10th consecutive month of year-over-year declines. This trend can be attributed to two familiar factors: escalating home prices and a strong job market,” CoreLogic said in its release.
By stages, early-stage delinquencies (30 to 59 days past due) dipped one basis point from the same period a year ago to 1.2% in January. Likewise, adverse delinquency (60 to 89 days past due) was down by two basis points to 0.3%, and serious delinquency (90 days or more past due, including loans in foreclosure) posted a two-percentage-point decline to 1.8%.
“The large rise in home prices — up 19% in January from one year earlier, according to CoreLogic indexes for the US — has built home equity and is an important factor in the continuing low level of foreclosures,” said Frank Nothaft, chief economist of CoreLogic.
Foreclosure inventory rate, or the share of mortgages in some stage of the foreclosure process, decreased to 0.2% from 0.3% in January 2021. Transition rate, or the percentage of mortgages that transitioned from current to 30 days past due, remained unchanged at 0.7%.
While the January foreclosure rate is down from last year’s level, the expiration of moratoriums in some states caused the number of foreclosures to rise month over month.
“There are many homeowners that have faced financial hardships during the pandemic and are emerging from 18 months of forbearance. The US may experience an uptick in distressed sales this year as some owners struggle to remain current after forbearance and loan modification,” Nothaft said.
However, CoreLogic noted that the January 2022 foreclosure rate was flat from December and is still the lowest recorded in 23 years.