Foreclosure Inventory Falls, But Delinquency Rate Rises in August

Foreclosure inventory is down nationwide, but the delinquency rate is up, according to Black Knight Financial Services’ “First Look” at August Mortgage Data released on September 25.
Foreclosure starts declined by 10 percent from July to August and by 24 percent from August 2013 to August 2014, according to Black Knight. The month-over-month decrease in foreclosure starts was the first in five months. The total number of foreclosure starts in August was reported at 81,600. Foreclosure inventory, which is the total number of loans in foreclosure, fell to 913,000, its lowest point since March 2008. According to Black Knight, foreclosure loans are past due for an average of 1,010 days.
The monthly prepayment rate, which is historically a good indicator of refinance activity, fell by more than 8 percent from July to August, ending a string of five consecutive months with an increase, according to Black Knight.
While foreclosure starts and overall inventory fell, however, the mortgage delinquency rate took a 5 percent month-over-month leap in August up to its highest point since February; the delinquency rate declined year-over-year, however, by 4.8 percent, Black Knight reported. The majority of new delinquencies reported in August were in the early stage of delinquency. The total number of delinquent loans increased by 146,000 from July to August. Delinquent loans are defined as those more than 30 days past due but not in foreclosure.
“While August’s delinquency rate did rise nearly 5 percent, it’s important to realize that the vast majority of these new delinquencies are early stage – just 30 days past due,” said Kostya Gradushy, manager of research and analytics for Black Knight. “This can be a particularly volatile metric, as many borrowers who miss a single payment do tend to self correct. At the same time, the foreclosure rate continued to decline in August, down more than 33 percent from last year, with inventory reaching a six and half year low. Overall, the long term trends in both delinquent mortgages and loans in foreclosure continue to be positive ones.”


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