Hurricane Stricken States Now Seriously Delinquent

Black Knight notes a significant uptick in seriously delinquent mortgages in December.  The number of loans that were 90 or more days overdue increased by 60,000 during the month to 726,000.  This is 44,000 more delinquencies than were recorded in December 2016.

Although seasonal and calendar related pressures contributed to the increase, the company, in its "First Look" at the month's loan performance data, attributed much of the increase to Hurricanes Harvey and Irma which struck several coastal states in September and October respectively.  An estimated 40,200 90+ day delinquencies are blamed on Hurricane Harvey which hit the Gulf Coast of Texas and 102,500 on Irma which affected almost the entire State of Florida and the eastern part of Georgia. Florida now has the largest share of severely delinquent loans in the country (4.14 percent), knocking Mississippi to second place. Mississippi however remained the state with the highest number of non-current loans overall, 11.34 percent.

Shorter-term delinquencies were higher as well. There were 2,412,000 properties that were 30 or more days past due but not in foreclosure.  This was 88,000 more delinquent loans than in November and 164,000 more than a year earlier.  The delinquency rate rose 3.5 percent to 4.71 percent, the highest since early 2016.  That rate also represented an increase of 6.5 percent year-over-year, the fourth consecutive annual increase.

There was better news regarding foreclosure statistics. Despite the rise in 90-day delinquencies, foreclosure starts hit a post-recession low at 44,500, declines of 6.90 percent and 25.46 percent for the month and year respectively.  The foreclosure inventory, loans in the process of foreclosure, posted a 32 percent annual decline; a decrease of 152,000 loans, 6,000 of which were in December, to a total of 331,000. The foreclosure rate (sales as a percentage of 90+ day delinquencies) was 1.23 percent, down 23.03 percent month-over-month and 30.96 percent on an annual basis.

The total number of non-current loans, including the foreclosure inventory, rose 12,000 over the course of 2017, to 2,743,000.

In addition to Mississippi, the states with the highest share of non-current loans were Louisiana at 9.79 percent, Florida (9.26 percent), Alabama (7.83 percent), and West Virginia (7.79 percent.)

Prepayment activity, generally an indication of refinancing, fell nearly 6% in December, representing a 31.53 percent year-over-year decline.  The Monthly Prepayment Rate (SMM) was 0.93 percent, a -5.57 percent change from November.

Black Knight will provide a more in-depth review of this data in its monthly Mortgage Monitor report. It will be available by February 5.