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Loan Performance Insights Report Highlights: June 2017

Foreclosure Rate Lowest in Ten Years

Molly Boesel    |    Mortgage Performance

  • Strong job growth and house price appreciation have contributed to declines in delinquencies
  • The current-to 30-day transition rate edged down in June 2017 from a year earlier
  • San Francisco had the lowest delinquency rate of the largest metro areas

In June 2017, 4.5 percent of home mortgages were in some stage of delinquency, down from 5.3 percent a year earlier and the lowest for any June since 2006, when it was 4.2 percent, according to the latest CoreLogic Loan Performance Insights Report. The measure includes all home loans 30 days or more past due, including those in foreclosure. For the month of June, the share of delinquent mortgages was highest – 11.3 percent – in June 2010.

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CoreLogic Chief Economist Frank Nothaft noted in this month’s report that gains in home prices and employment have contributed to lower delinquencies. Job growth means fewer homeowners will fall behind on their payments and higher home values make it possible for more homeowners who do fall on hard times to sell their properties and pay off their mortgages, thereby avoiding a delinquency. The foreclosure inventory rate, meaning the share of mortgages in some stage of the foreclosure process, was 0.7 percent, down from 0.9 percent a year earlier. The foreclosure rate has held steady for the past three months at the lowest level in 10 years. Before the foreclosure crisis began in mid-2007, the foreclosure inventory rate averaged 0.6 percent.

The share of mortgages that were 30 to 59 days past due – considered “early-stage” delinquencies – was 2 percent in June 2017, down from 2.1 percent in June 2016. The share of mortgages 60 to 89 days past due was 0.6 percent in June 2017, down slightly from the June 2016 rate of 0.7 percent.

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In addition to delinquency rates, CoreLogic tracks the rate at which mortgages transition from one stage of delinquency to the next, such as going from being current to 30 days past due. Figure 1 shows that the current- to 30-day transition rate remained low in June. The June 2017 current- to 30-day rate was 0.9 percent, the same as in June 2016. The 30- to 60-day transition rate was 15.8 percent in June 2017, down from 16.8 percent in June 2016, while the 60- to 90-day transition rate was 26.6 percent this June, down from 27.7 percent a year earlier.

Figure 2 shows the states with the highest and lowest rate of mortgages in some stage of delinquency. In June 2017 that rate was highest in Mississippi – 8.2 percent — and North Dakota had the lowest rate at 2 percent. Figure 3 shows the 30-days-or-more past-due rate for the 10 largest metro areas[1]. That rate was highest – 6.8 percent – in the New York metro area and lowest – 1.8 percent – in San Francisco. Unlike San Francisco, the New York metro area is in a judicial foreclosure state where the foreclosure process has played out more gradually.

1 Metro areas used in this report are the ten most populous Core Based Statistical Areas.

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