Major Delinquency Metrics Turned Higher in July

Mortgage delinquencies jumped in August, a 5 percent increase which sent the rate to its highest level since February.   At the same time, foreclosure starts declined for the first time in five months, dropping 10 percent from July and 24 percent from August 2013.  There were 81,600 foreclosures initiated during the month.

These were two of the headlined findings contained in the preview released today from Black Knight Financial Services' Mortgage Monitor report.  The complete report will be released during the first week of October.

The 4.68 increase in the delinquency rate brought the number of properties that are 30 or more days past due but not in foreclosure up to 3.0 million, an increase of 146,000.  The rate at the end of August was 5.90 percent which, despite the increase is still 4.80 percent below the rate in August 2013.

Of the 3 million delinquent loans 1.14 million are seriously so, that is 90 or more days past due but not in foreclosure.  This was 7,000 more loans than in July but 145,000 fewer than a year earlier.

The foreclosure pre-sale inventory, loans that are in process of foreclosure, fell to 913,000, the lowest number since March 2008.  The inventory contracted by 22,000 loans compared to July and 145,000 units from August 2013.  The pre-sale inventory rate fell to 1.80 percent, down 2.80 percent and 32.39 percent month-over-month and year-over-year respectively.

The total of non-current loans, those that are either delinquent or in foreclosure, was 3,908,000, 123,000 more than in July.  There were, however 557,000 fewer distressed loans than a year earlier.

Foreclosure sales were at a rate representing 1.72 percent of seriously delinquent loans.  This rate was down 7.09 percent from the previous month and was 35.39 percent lower than at the end of August 2013.

Core-Logic said the pre-payment rate, a number which often correlates with refinancing, was 0.96 percent, a drop of 8.30 percent from July and 31.37 percent for the year.  The decrease followed five straight months of increases in the rate.

States with the highest percentage of non-current loans were Mississippi at 14.68 percent followed by New Jersey (12.59 percent), Louisiana (11.37 percent), New York (11.10 percent), and Florida (10.98 percent.)  All five of those states have a lower rate than one year earlier although Louisiana and Mississippi are down by less than one percent.  Florida has declined by 27 percent year-over-year, New Jersey by 13 percent, and New York by almost 9 percent.

Mortgage Monitor data is compiled by Black Knight's Data and Analysis division and is derived from the company's loan-level database.  That database represents approximately two-thirds of the overall mortgage market.