Delinquency Spike Forecast for Hurricane-Hit Areas
ATTOM Data, Corelogic find more homeowners fall behind in year after natural disasters.
Two studies released this week found mortgage delinquencies rose significantly this past summer in parts of Texas and Florida hit by hurricanes a year ago.
“A decade after poorly underwritten mortgages triggered a housing market crash, it’s clear that the foreclosure risk associated with those problem mortgages has faded,” said Daren Blomquist, senior vice president at ATTOM Data Solutions.
“The biggest foreclosure risk in today’s housing market comes from natural disaster events such as the twin hurricanes of a year ago,” he said.
The ATTOM U.S. Foreclosure Market Report released Thursday shows forecloses were started on 177,146 U.S. properties in the three months ending Sept. 30, down 6% from the previous quarter, down 8% from a year ago and reaching the lowest level since the fourth quarter of 2005.
The number of starts was 36% below pre-recession average of 278,912 properties per quarter. Also the percentage of foreclosure starts tied to mortgages originated from 2004 to 2008 was 44%, down from about 75% in 2012.
However, foreclosure starts during the third quarter rose 25% in Florida and 3% in Texas, including a 51% spike in the Houston metro area.
Blomquist said that areas hit by Hurricane Michael, which reached the Florida panhandle Wednesday, and areas in the Carolinas and Virginia hit by Hurricane Florence last month are likely to see similar increases in delinquency rates within a year.
CoreLogic, an analytics company in Irvine, Calif., found 4.1% of mortgage payments were at least 30 days late in July, down from a 4.7% delinquency rate a year earlier. In addition, 0.5% of mortgaged homes were in foreclosure, down from 0.7% a year earlier.
However, several metropolitan areas in Florida and Texas recorded increases in delinquency rates from June to July.
Homes at risk for early-stage delinquency include more than half a million homes in the Carolinas and Virginia damaged by Hurricane Florence: about 487,000 in North Carolina, 109,000 in South Carolina and 28,000 in Virginia, according to CoreLogic.
“Despite an overall sunny picture of delinquencies, weather-driven hotspots dot the country,” CoreLogic President/CEO Frank Martell said.
The ATTOM report also showed foreclosure rates falling to pre-recession lows. Nationwide one in every 757 properties had a foreclosure filing in the third quarter.
“We’re finding a new normal for foreclosure rates in terms of how low they can go,” Blomquist said. “That’s a reflection of the ultra-conservative underwriting that has taken place since 2010.”
Another factor is that the current housing recovery has been driven by investors, while homeownership rates remain well below their pre-recession levels, he said.