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Delinquencies Reach Another Record Low

Delinquencies dropped to another record low in March, with only 2.7% of all mortgages in the U.S. experiencing some stage of delinquency, according to CoreLogic’s monthly Loan Performance Insights Report.

Delinquencies were down 2.2 percentage points from March 2021, when they were at 4.9%.

The share of early-stage delinquencies, or loans 30 to 59 days past due, was 1%, unchanged YOY, while the share of adverse delinquencies (60 to 89 days past due) was down 0.1% YOY to 0.3%.

Serious delinquencies accounted for only 1.4% of U.S. mortgages, down from 3.5% the year prior and a high of 4.3% in August 2020.

The share of mortgages in some stage of the foreclosure process, known as the Foreclosure Inventory Rate, decreased 0.1% YOY to 0.2%. This is the lowest foreclosure rate since at least January 1999.

However, the Transition Rate, or share of mortgages that transitioned from current to 30 days past due, rose 0.1% YOY to 0.5%.

“The share of borrowers in any stage of delinquency was at an all-time low in the first quarter of 2022,” said Molly Boesel, principal economist at CoreLogic. 

“However, more than one-third of delinquent mortgages remain six months or more past due on their payments. While we may see an uptick in distressed sales over the coming year, historic home equity gains should keep these sales from reaching elevated levels.”

Equity may not save all struggling homeowners from delinquency and foreclosure, however. Black Knight has reported that while homeowners with limited equity were more likely to be referred to foreclosure during the beginning of the Great Recession, foreclosure start rates on delinquencies of 120 or more days have been similar regardless of equity position since 2010.

“While we may see some variation in foreclosure activity based on the equity levels of borrowers who are unable to return to making payments post-forbearance, those with strong equity won’t necessarily be immune to foreclosure referral,” Black Knight Data & Analytics President Ben Graboske said.

The report did note that high-equity borrowers are more than 40% less likely to face short sale, foreclosure sale, deed-in-lieu, or other involuntary liquidation than borrowers with weaker equity positions.