New Delinquencies End 2020 at a Low Rate, Though Serious Delinquencies Remain Elevated

Loan Performance Insights Report Highlights:
December 2020

By Molly Boesel Housing Affordability, Mortgage Finance

  • The nation’s overall delinquency rate was 5.8% in December.
  • States with large increases in unemployment posted large increases in delinquency rates.

In December 2020, 5.8% of home mortgages were in some stage of delinquency (30 days or more past due, including those in foreclosure)[1], a small decrease from November 2020, but a 2.1-percentage point increase from December 2019, according to the latest CoreLogic Loan Performance Insights Report.

Overall Delinquency Rates

The share of mortgages that were 30 to 59 days past due – considered early-stage delinquencies – was 1.4% in December 2020, down sharply from a post-pandemic high of 4.2% in April 2020 and below the year ago rate of 1.8%. The share of mortgages 60 to 89 days past due was 0.5% in December 2020, down from 0.6% in December 2019 and down from 2.8% in May 2020. The drop in early and mid-stage delinquencies from the spring indicates a lower share of mortgages entering delinquency after the initial surge after the start of the pandemic in the U.S.

The serious delinquency rate – defined as 90 days or more past due, including loans in foreclosure – was 3.9% in December, more than three times that of December 2019, but down from a recent high of 4.3% in August. The CARES Act provides relief to mortgage holders and has worked to keep delinquencies from progressing to foreclosure and therefore the foreclosure inventory rate – the share of mortgages in some stage of the foreclosure process – remained low at 0.3% in December 2020, down from 0.4% from December 2019. The decrease in the serious delinquency rate from the August high and increases in home equity as prices continued to increase in 2020 lessen the likelihood of a foreclosure wave later in 2021 when homeowners emerge from forbearance.

Stage of Delinquency: Rate of Transition

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 current to 30 days past due (Figure 1).

Figure 1: Current- to 30-Day Transition Rate Back to Pre-Pandemic Levels
Figure 1

The share of mortgages that transitioned from current to 30 days past due held steady at 0.8% in December 2020 – a decrease from the peak of 3.4% in April 2020. The transition rate in December was the same as the monthly average for the 12 months prior to the pandemic, meaning that while the rate of mortgages in any stage of delinquency remained elevated, fewer borrowers slipped into delinquency than early in the recession.

Figure 2: States With the Highest and Lowest Rate of Mortgages At Least 30 Days Past Due
Figure 1

State and Metro Level Delinquencies

Figure 2 shows the states with the highest and lowest share of mortgages 30 days or more delinquent. In December 2020, that rate was highest in Louisiana at 9.4% and lowest in Idaho at 3%.  Louisiana, Mississippi and New York were in the top five a year earlier, and all U.S. states posted annual gains in their overall delinquency rate in December 2020. Places with large job losses during the last year experienced large increases in delinquencies. Hawaii and Nevada had the largest 12-month spike in delinquency rates, both up 4.1 percentage points. They also had large increases in unemployment rates, up 6.6 percentage points in Hawaii and 5.5 percentage points in Nevada compared with 3.1 percentage points for the U.S.  

Figure 3: Percentage of Mortgages At Least 30 Days Past Due For the Ten Largest Metropolian Areas
Figure 1

Figure 3 shows the 30-plus-day past-due rate for December 2020 for 10 large metropolitan areas.[2] Miami had the highest rate at 9.5% and San Francisco had the lowest rate at 3.5%. Miami’s rate increased 4.6 percentage points from a year earlier. Outside of the largest 10, all but three metros recorded an increase in the overall delinquency rate. Odessa, Texas, experienced the largest annual increase with 9.8 percentage points – the unemployment rate in Odessa increased by 8.6 percentage points in December from a year ealier. Lake Charles, Lousisiana — which was affected by Hurricane Laura in August and Hurricane Delta in October — had a 7.6 percentage point increase in the past due rate.

Mortgage delinquencies started 2020 at historical lows but were adversely affected by large job losses resulting from the pandemic, causing early-stage delinquencies to hit historical highs in the spring. The ongoing forbearance provisions have kept foreclosure rates low, and early-stage delinquencies decreased back to pre-pandemic levels by early fall, showing that fewer homeowners were falling behind on payments. For ongoing housing trends and data, visit the CoreLogic Insights Blog: www.corelogic.com/insights.

© 2021 CoreLogic, Inc. All rights reserved.

[1] Data in this report is provided by TrueStandings Servicing.  https://www.corelogic.com/products/truestandings-servicing.aspx. The CARES Act provided forbearance for borrowers with federally backed mortgage loans who were economically impacted by the pandemic. Borrowers in a forbearance program who have missed a mortgage payment are included in the CoreLogic delinquency statistics, even if the loan servicer has not reported the loan as delinquent to credit repositories.

[2] Metropolitan areas used in this report are the ten most populous Metropolitan Statistical Areas. The report uses Metropolitan Divisions where available.