Even Bad News is Good in September Foreclosure Summary

September appears to have been another month in which loan performance improved and the states continued to slog through the overhang of delinquent mortgages left over from, in some cases, the early days of the housing crash.  Black Knight Financial Services released a "first look" at its data for the month showing overall improvement in delinquency and foreclosure metrics.

The inventory of delinquent loans - those for which one or more payments have been missed but the loan is not yet in foreclosure - declined by 3.90 percent or 117,000 loans in September, nearly reversing a huge 146,000 delinquent loan increase in August.  This brought the 30+ day rate down to 5.67 percent and was a 12.22 percent drop representing 388,000 fewer loans compared to September 2013.

Of the 2.88 million loans that were delinquent at the end of September, 1.12 million were seriously so, that is 90 or more days delinquent but not yet in foreclosure.  This number was down 25,000 from August and 213,000 from one year earlier.

There were 893,000 loans in some stage of foreclosure at the end of September, down 20,000 from the previous month and 435,000 fewer loans than in September 2013.  The national foreclosure inventory rate was 1.76 percent of all mortgaged homes, a -2.20 percent change from August and down almost exactly one-third from the previous September.  The foreclosure inventory at the end of September was at its lowest level since February 2008.

Non-performing loans, the total of those that were more than 30 days past due or in foreclosure was 3.77 million at the end of September, a decrease of 137,000 loans month-over-month and 822,000 year-over-year.

Two of Black Knights data points increased, but even that is not all bad news as it indicates that states are making progress in reducing the backlog of distressed loan inventory.  There were 91,000 foreclosure starts during the month, 11.52 percent more than in August although they were down 16.51 percent from a year earlier.  Foreclosure sales also increased slightly, to 1.80 percent of those loans delinquent over 90 days, up 4.60 percent from August.

The states with the highest percentage of non-current loans in September were Mississippi (14.41 percent), New Jersey (12.17 percent), Louisiana (11.16 percent), New York (10.76 percent), and Florida (10.55 percent) All five states had a significantly lower percentage of non-performing loans than a year earlier and in the case of Florida that percentage was down by nearly one-third.

Black Knight will release its monthly Mortgage Monitor containing more loan level data for September on November 3.