The surge of mortgage delinquencies expected in the wake of the pandemic has apparently begun, and the numbers are stark. According to a report released today (Aug. 11) by CoreLogic (NYSE: CLGX), 7.3% of U.S. residential mortgages were in some state of delinquency — ranging from 30 days past due to already in foreclosure — at the end of May.
That’s about double the delinquencies from a year ago, when the May 2019 rate was 3.6%, the data and analytics firm said in a news release. And the rate of serious delinquencies — 90 days or more past due and/or in foreclosure — rose for the first time since the Great Recession in 2010.
Ominously, the CoreLogic announcement added, “Absent further government programs and support, CoreLogic forecasts the U.S. serious delinquency rate to quadruple by the end of 2021, pushing 3 million homeowners into serious delinquency.”
CoreLogic says its monthly Loan Performance Insights report includes only first liens and that its delinquency, transition, and foreclosure rates are measured only against homes that have an outstanding mortgage.
Some pain everywhere, lots of pain in some places.
The May report found year-over-year increases in overall delinquencies in all 50 states and an increase in serious delinquency rates in more than 75% of the nation’s metro areas. There also was a high correlation between higher rates and areas most affected by COVID-19.
For instance, the largest overall delinquency gains in May were 6.4 percentage points each in New Jersey and Nevada, both hotspots at the time. Florida was up 5.8 percentage points.
High unemployment = high anxiety
“Government and industry relief programs have helped to cushion the initial financial blow of the pandemic for millions of U.S. homeowners,” said Frank Martell, president and CEO of CoreLogic.
Indeed, with unemployment still high, the future of many of these mortgages, and the families living in those homes, is murky, especially as unemployment benefits expire and foreclosure bans and forbearance plans expire, leaving those homeowners scrambling for options.
Millions of new foreclosures could disrupt not only the real estate market but millions of lives, communities, and American society in general.