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First Mortgage Defaults Continue to Drop

Phil Hall
Aug 09, 2016
First mortgage defaults have reached their lowest level since January 2007, according to the June 2016 Equifax National Consumer Credit Trends Report

First mortgage defaults have reached their lowest level since January 2007, according to the June 2016 Equifax National Consumer Credit Trends Report.

Equifax reports that the first mortgage write-off rate in June was 3.3 basis points (bps) while the total number of first mortgage defaults in June was 17,909, the lowest in more than nine years. During June, Equifax determined that the severe delinquency rate was 1.40 percent, down 2.07 percent year-over-year, while the severe delinquency rate on home equity installment loans was 1.46 percent, down from 1.80 percent in June 2015, and the severe delinquency rate on home equity lines of credit was 1.28 percent, a 1.45 percent year-over-year drop.

Among U.S. markets, Puerto Rico had the highest first mortgage write-off rate at 12.9 bps, twice as high as the second-highest market (Nevada with 6.6 bps) and three times the national average.

“The backlog of foreclosures from the financial crisis finally appears to be waning and write-offs are returning to historically-normal levels,” said 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.”

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