National delinquency, foreclosure rate reductions mask worsening conditions in some areas
WASHINGTON, D.C. – February 5, 2014 – (RealEstateRama) — Metropolitan housing markets have not yet emerged from the foreclosure crisis, according to a new report from the Urban Institute, National Housing Conference (NHC), and the Local Initiatives Support Corporation (LISC). Foreclosure activity has declined in recent years, but metropolitan foreclosure rates are still well above historic norms and there is substantial variation across the country. Among large metro markets, foreclosure rates are falling slowly and steadily in some, but foreclosure activity may not yet have peaked in others. The report, “State of the Foreclosure Crisis: Past the Peak but Not Recovered,” details the current state of the foreclosure crisis by examining foreclosure and mortgage delinquency trends in the nation’s 100 largest metro areas from December 2009, the peak of the crisis, to September 2013.
The report shows that in December 2009 the average serious mortgage delinquency rate across the 100 largest metro areas hit a high of 10.5 percent. Since then the rate has experienced a slow but steady decline, holding at 7.6 percent as of September 2013. But the report emphasizes that the delinquency rate is still substantially above pre-crisis levels. In addition, persistently high foreclosure rates in some metro areas continue to hamper the recovery of those housing markets.
While metro foreclosure rates are well above the historical norm of less than one percent, most metro areas are experiencing a gradual reduction in serious delinquency rates. For example, the report indicates that the hardest hit areas at the beginning of the foreclosure crisis—metro areas in California, Florida and Midwest states like Indiana, Michigan and Ohio—have all seen steady improvements since 2009. Yet, in some Florida metro areas where declines have been significant— such as metropolitan Miami and Orlando—high rates of serious delinquency persist.
Since December 2009, more than a quarter of the nation’s largest metro areas have stagnant or worsening serious mortgage delinquency rates. Serious delinquency rates have been relatively unchanged in 18 metro areas (decreasing by less than one percent), while serious delinquency rates in another nine metro areas continued climbing.
“The data show that there have been improvements, but we have not yet left the crisis behind us. Serious mortgage delinquency rates remain abnormally high, and the crisis has not even turned the corner in some of the country’s largest metro areas,” said Rob Pitingolo, research assistant at the Urban Institute and author of the report.
The report analyzed the percent of mortgages that were 90 or more days delinquent and the percent of mortgages in foreclosure. In combination, these figures form the “serious delinquency” rate. Serious delinquency provides a good indicator of mortgage distress levels. The data revealed that the foreclosure crisis in the 100 largest metros is generally, but not uniformly, improving.
The high serious delinquency rates in areas like Florida and the Northeast, most notably New York and New Jersey, reflect how devastating the mortgage crisis has been in these areas, and how lengthy a judicial foreclosure process can be. Without sufficient resources to process a high volume of foreclosure cases, courts in judicial foreclosure states become backlogged and properties stay in limbo for years. “A protracted foreclosure process hurts homeowners, lenders, and communities,” said NHC’s Vice President for Policy and Advocacy, Ethan Handelman. “The process has to protect the rights of all involved, but the current backlog benefits no one.” The report notes that future success of housing markets will depend on a state’s ability to process foreclosures and return homes to the market in a timely manner.
“While more progress needs to be made, I think that there are also a lot of positives we can take from the data,” Pitingolo added. “Some of the most affected metro areas are getting their mortgage delinquency rates back down, and that is a good sign.”
The report can be accessed at the Foreclosure-Response.org website at http://bit.ly/1bujpQf.
About the Urban Institute
The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation. It provides information, analyses, and perspectives to public and private decision makers to help them address these problems and strives to deepen citizens’ understanding of the issues and trade-offs that policymakers face.
About the Local Initiatives Support Corporation
LISC combines corporate, government and philanthropic resources to help nonprofit community development corporations revitalize distressed neighborhoods. Since 1980, LISC has invested $12.9 billion to build or rehab 298,300 affordable homes and apartments and develop 49 million square feet of retail, community and educational space. For more, visit www.lisc.org.
About the National Housing Conference and Center for Housing Policy
Formed in 1931, the nonprofit National Housing Conference is dedicated to helping ensure safe, decent and affordable housing for all in America. As the research division of NHC, the Center for Housing Policy specializes in solutions through research, working to broaden understanding of America’s affordable housing challenges and examine the impact of policies and programs developed to address these needs. Through evidence-based advocacy for the continuum of housing, NHC develops ideas, resources and policy solutions to shape an improved housing landscape.
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