Foreclosures hit 12-year low; loan delinquencies up in disaster-hit areas

A record-setting foreclosure rate

It’s a good time to be an American homeowner. Not only has home equity topped $6 trillion, but foreclosures have now dropped to 0.5 percent — their lowest point in more than a decade.

Foreclosures and loan delinquencies down

The foreclosure rate has dropped to a 12-year low, according to the latest Loan Performance Insights report issued by CoreLogic this week. Only a mere 0.5 percent of mortgage loans were at some point in the foreclosure process in July. That’s down 0.2 percentage points since last year.

Overall loan delinquencies were also down — both early and late-stage ones. And according to Frank Nothaft, chief economist at CoreLogic, those delinquencies are likely to keep declining as the year goes on.

“With the national unemployment rate remaining below 4 percent since July, further declines in U.S. delinquency rates are likely in the coming months,” Nothaft said.

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Exceptions to the rule

There are a few exceptions though. In places where natural disasters have hit Nothaft said there will likely be an uptick in delinquencies and foreclosures.

“The exception will be in local areas impacted by natural hazards or a rise in unemployment,” Nothaft said. “The destruction of homes and disruption to local commerce caused by natural disasters lead to a subsequent spike in local delinquency rates, even for homes that were untouched.”

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Florida and Texas both saw increases in the rates of serious delinquency after 2017’s hurricane season. North Carolina and Hawaii will likely experience similar jumps in the near future.

“We expect higher delinquency rates in the mid-Atlantic region later this year due to Hurricane Florence, which impacted nearly half a million homes in North Carolina alone,” said Frank Martell, president and CEO at CoreLogic. “We also see increases in serious delinquency rates in Florida and Texas reflecting the damage of Hurricanes Harvey and Irma. In addition, Hawaii will likely experience an increase in delinquency rates as a result of Hurricane Lane and the eruption of Kilauea.”

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