The U.S. foreclosure rate and mortgage delinquencies have fallen to levels not seen since before the housing crash eight years ago, but that doesn’t necessarily mean that the housing market has return to normal. CoreLogic’s Chief Economist Frank Nothaft spoke with Scotsman Guide News about the improved housing market and why the foreclosure rate could take another two years to return to its traditional norm.
Completed foreclosures ticked up for the month in March, but overall the trend has been down, right?
When you look on a year-over-year basis, and we compare our latest data from March 2015 to March 2016, the news is very good, and it has been very good for a number of years. The total amount of foreclosure inventory — that is the percentage of mortgaged property that is some stage of the foreclosure process — that’s dropped 23 percent from a year ago. We are now at the lowest inventory level, the lowest foreclosure rate, since November 2007 prior to the onset of the Great Recession. It is still elevated if we compare it to what the foreclosure rate was 15, 20 years ago, so we are not back to a normal foreclosure rate yet, but we have made substantial progress in the U.S.
Do you believe we’ll get back to a foreclosure rate that would be considered normal and, if so, when?
Yes, I do think we will, but I think it is probably still a couple of years away. There are still a lot of what we refer to in the industry as “the legacy books,” that is, the book of loans that originated in ’05, ‘06 and ’07, which continue to have poor performance — in other words, high default rates. The loans that have been originated since 2009 have performed… read more here