Delinquency rates hit lowest levels in four months

National mortgage market sees improvement

Delinquency rates hit lowest levels in four months

Intercontinental Exchange, Inc. (ICE) has unveiled its “first look” at January 2024 month-end mortgage performance statistics, highlighting that the national delinquency rate experienced a notable drop to 3.38% in January – its lowest level since October.

The improvement signifies a positive turn after the previous month’s rise. Notably, past-due mortgages witnessed a decline across the board, indicating a promising trajectory in early- and late-stage delinquency cures. Serious delinquencies, defined as loans 90+ days past due but not in active foreclosure, decreased by 19% year over year, with the population now standing at 470,000.

Despite these encouraging figures, concerns loom over a surge in foreclosure starts, which spiked by 43.3% month over month, totaling 34,000 in January – the highest since April 2022.

Elspeth Spransy, VP of field services at SingleSource Property Solutions, emphasized the importance of local resources in mitigating the impact of foreclosures on neighborhood conditions.

“Foreclosures affect neighborhood conditions, so you need the best and most knowledgeable local resources to support you,” Spransy said. “Having the right tools in place before the increase in foreclosures will help servicers respond quickly and effectively. Now is the time to ensure that property preservation service vendors are ready to perform in this highly regulated environment.”

The number of loans in active foreclosure, meanwhile, rose by 7,000 to 219,000, albeit remaining 23% below pre-pandemic levels.

Donna Schmidt, founder and managing partner at DLS Servicing, attributed this trend to inflationary pressures impacting housing. Schmidt emphasized the need for mortgage servicers to enhance their loss mitigation efforts, advocating for a comprehensive approach that includes home retention options, short sales, and deeds in lieu of foreclosure.

“A robust, well-rounded loss mitigation approach will help to reduce potential servicing losses,” Schmidt stated. “But servicers must be proactive and persistent through the foreclosure process.”

While the increase in foreclosures warrants attention, the report underscores that serious delinquencies remain relatively low, with 70% of such loans shielded from foreclosure, mitigating near-term risks. Prepayment activity, meanwhile, witnessed a marginal rise, fueled by easing interest rates and increased demand for refinancing.

ICE will provide a more comprehensive review of this data in its upcoming Mortgage Monitor report, available online by March 4, 2024.

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