Foreclosure rates hit a generational low before coronavirus struck

It was the calm before the coronavirus storm: January had the lowest mortgage delinquency rate in over 20 years, according to CoreLogic.

The data provider's Loan Performance Insights Report showed 3.5% of home loans sat in some stage of delinquency compared to 4% in January 2019. A strong job market and low interest rates drove the overall decline in late payments.

Early-stage delinquencies edged down annually to 1.7% from 1.9%. The share of mortgages 60-89 days past due declined 0.1 percentage points to 0.6%. The serious delinquency rate — mortgages 90 or more days past due, including foreclosures — dipped to 1.2% from 1.4% year-over-year, the lowest rate since 1% in April 2000. The foreclosure inventory rate stayed at 0.4%, tying the lowest month since at least January 1999.

However, after 25 straight months of year-over-year improvements, the economic shutdown and subsequent spike in unemployment from the COVID-19 outbreak will bring a wave of distressed mortgages.

"After some initial cushioning from equity buffers, lower mortgage interest costs and government support and forbearance programs, we expect delinquency rates to jump significantly throughout the year as the economic toll from COVID-19 becomes more evident," Frank Martell, president and CEO of CoreLogic, said in a press release. "It is likely that areas of the country that have local economies driven by energy, transportation and media and entertainment will lead the way in delinquencies. The ultimate extent of the higher delinquencies will depend on how quickly the broader economy opens up again and employment levels rebound — both of these factors are uncertain at this time."

In January, for the fifth month in a row, zero states had their individual delinquency rates increase. The largest declines came across the Southeast of the country. Mississippi led with a 1.1% annual decrease. North Carolina followed with a 0.9% decline and Louisiana, Alabama and West Virginia trailed, each with drops of 0.8%.

Overall, the highest delinquency rates were in Mississippi at 6.9%, Louisiana at 6.3% and New York at 5.1%. The lowest came in Colorado at 1.5%, Washington at 1.6% and Oregon at 1.7%.