First Mortgage Defaults at Lowest Level since January 2007
The first mortgage write-off rate is 3.3 basis points (100ths of a percentage point) of outstanding balances, while the total number of first mortgage defaults in June was 17,909, the lowest since January 2007, according to the June 2016 Equifax National Consumer Credit Trends Report.
Equifax defines a write-off as a loan terminated in severe derogatory status, which for mortgage loans most often means a loan terminated when a bank seizes the collateral property through a foreclosure process. While the overall U.S. first mortgage rate returned to historic lows, some states in the country did not follow this trend. Puerto Rico was 3 times the national write-off rate at 12.9 basis points and Nevada was two times the national rate coming in at 6.6 basis points. Following is a ranking of the top 10 states with the highest write-off rates: 1. Puerto Rico (12.9) 2. Nevada (6.6) 3. Florida (6.2) 4. New Jersey (6.2) 5. Delaware (5.1) 6. Mississippi (5.0) 7. Maryland (4.9) 8. New Mexico (4.8) 9. South Carolina (4.8) 10. Rhode Island (4.5) “The backlog of foreclosures from the financial crisis finally appears to be waning and write-offs are returning to historically-normal levels,” says Amy Crews Cutts, senior vice president and chief economist at Equifax. “Rising home values have helped significantly, as have improving labor markets. Given the low inventory of homes for sale and the overall improving credit profile of the U.S. consumer, we expect home sales to maintain the upward trend we’ve seen in the first half of the year and for mortgage default performance to continue its downward path.” For Home Equity Lines of Credit (HELOC) and home equity installment loans, write-offs, as a share of total balances, the year over year changes showed:
First Mortgage
Home Equity Lines of Credit (HELOC)
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