Delinquencies dropped to a record-breaking low for the second month in a row during April; but the number of borrowers 90-days or more late, while also falling, remains above pre-pandemic levels.
The share of all mortgages late but not in foreclosure was 2.8%, down from 2.84%
The drop in late payments overall suggests that despite forecasts suggesting
However, the serious delinquencies remaining in the market and relative upticks in some foreclosure measures suggest the market is still working through some entrenched distress.
Foreclosure inventory was up by 4,000 units from the previous month and 20,000 from a year earlier at 173,000. Also, while April’s 21,400 foreclosure starts were down nearly 12% from March, they were more than four times as high as they were a year ago.
While high levels of home equity in most areas have limited foreclosure activity to date, signs of overvaluation in some housing markets suggest certain borrowers may be heading toward a point where they have less of a buffer than in the past, and foreclosure activity could increase in the future.
“If we do have overpriced markets that correct in the next year as foreclosure processes are restarting, that could result in at least a marginal lift in the number of properties that go into foreclosure,” said Rick Sharga, executive vice president of market intelligence at Attom.
Homes in 88% of metropolitan areas have price-to-income ratios above their 15-year averages, according to
“If you happen to be one of those borrowers in an overpriced market that suddenly corrects, you could very quickly go from having a little bit of positive equity to being underwater,” Sharga said in an interview.