Serious Delinquencies Lowest Since May 2020

Only 4.2% of all mortgages were in some stage of delinquency in July 2021, according to CoreLogic’s monthly Loan Performance Insights Report. This is a 2.3% drop from July 2020, when it was 6.5%, but higher than the pre-pandemic rate of 3.6%.

The rate of early-stage delinquencies, ranging 20 to 59 days past due, dropped 0.4% year-over-year to 1.1%. Adverse delinquencies, 60 to 89 days past due, fell from 1% to 0.3% year-over-year. Delinquencies 90 or more days past due, or serious delinquencies, fell from 4.1% to 2.8%. It is the lowest serious delinquency rate since May 2020.

The share of mortgages that transitioned from current to 30 days past due dropped from 0.8% to 0.6% year-over-year. The foreclosure inventory rate decreased to 0.2%, the lowest foreclosure inventory rate in the 22 year history of CoreLogic’s data.

“Declining delinquency levels are an encouraging sign of economic improvement and the durability of the housing market,” said Frank Martell, president and CEO of CoreLogic. 

“Looking ahead to the end of many forbearance and other assistance programs, many borrowers receiving support must consider their financial options, including a potential loan modification, to ensure they stay current and keep foreclosures at bay.”

Every state had a decrease in annual overall delinquency, but one million people in the U.S. still have not been able to make a payment this year. Of all delinquent borrowers in July, 50% were late by six months or longer.

Many homeowners now have a helpful cushion to stave off foreclosure: surging equity. Equity grew $2.9 trillion since Q2 2020, averaging $51,500 in gains. Borrowers are considerably less likely to have their homes involuntarily liquidated if they have high equity.

However, it does happen. Thirty percent of borrowers recommended for foreclosure with 40% equity stakes lost their homes.

“It is true that rapidly rising home prices during the pandemic have boosted home equity, which is helpful in preventing borrowers from losing their home through foreclosure,” said CoreLogic economist Yanling Mayer.

“But it will take an affordable and sustainable exit plan to keep borrowers in their homes and preserve homeownership.”