Properties in mortgage default reach 15-year low

Register now

For the first time in 15 years, fewer than 2 million mortgaged properties lie in default or foreclosure status as of the end of January, according to Black Knight.

Furthermore, the mortgage delinquency rate, measured as loans at least 30 days late on their payment but not yet in foreclosure, was the lowest for any month since Black Knight started tracking this data in 2000, its First Look report noted.

January ended with 1.95 million properties where the borrower had missed one payment or the lender started foreclosure proceedings, down by 96,000 from December and 259,000 from January 2019. This is the fewest number of properties in default since March 2005, Black Knight added.

However, properties entering the foreclosure inventory increased by 1,000 units month-to-month. Foreclosure starts rose 8.35% compared with December to 42,800. But compared with a year ago, they were down by 14.74%.

The total delinquency rate of 3.22% was 5.37% lower than December and 14.17% lower than January 2019, with the annual decline being the strongest in over 12 months, Black Knight added.

Mississippi had the highest percentage of noncurrent mortgages, at 9.84%, which was 2.56% lower than for January 2019. Louisiana was next at 7.2%, down 9.57%; Alabama, 6.26%, down 7.29%; West Virginia, 6.1%, down 5.01%; and Arkansas, 5.79%, down 4.28%.

January's monthly prepayment rate was 1.26%, over 15% lower than December's. But prepayments were nearly 115% higher than the year-ago period, Black Knight said. In a sign how quickly things can change, the January 2019 prepayment rate of 0.59% was the lowest since November 2000. By October, it rose to a six-year high of 1.81%.

Rate movements at the end of the month increased the population of those in a position to refinance, Black Knight noted at that time.

Now, industry observers project a strong purchase season, another factor for prepayments as current homeowners sell and move.

For reprint and licensing requests for this article, click here.
Mortgage defaults Distressed Foreclosures MSR Refinance Purchase Black Knight