In a recent press release, the CFPB said that the tool indicates that mortgage delinquencies are at their lowest since the financial crisis, where the housing market crash forced a rash of nationwide defaults and foreclosures.
The new instrument also shows interactive graphs and charts that provide the scope of mortgage delinquencies in the country. These innovative tools provide the viewer with a concise breakdown of how the housing market fares in various regions across the nation, including at the county and metro-area level.
Two categories are implemented when using the CFPB tool to measure delinquencies. On the one hand, there is the list of borrowers whose mortgages are between 30 and 89 days past due. The second category of defaults concerns those who are seriously delinquent, being more than 90-days behind on payments. Typically, the 90-day late threshold triggers a foreclosure proceeding.
One significant benefit of the instrument is its ability to provide insight into upcoming trends facing the housing market. Tracking the rate of borrowers who are seriously behind in payments could serve as an indication of where the economy is headed.
Whereas a low percentage of defaulted loans could imply a healthy financial infrastructure, a growing number of delinquencies could be indicative of a coming housing crisis. Experts should, of course, analyze other aspects of the economy, such as job growth and overall buying trends, to determine if there is a possibility of a looming recession. Regardless, the CFPB tool offers a good starting point in the evaluation process.
If current rates, as tracked by the bureau this year, are any indication of things to come, then it may be a safe bet to say that the economy is on track for growth. The CFPB tool traced delinquent rates back to 2008 when the housing market as a whole was underwater. The instrument found that the number of severe delinquencies in 2017 are at their lowest since the financial crisis began to unfold. The national rate of 90-day defaults is at 1.1 percent as of March 2017. By comparison, the ratio was 4.9 percent in March 2010.
The CFPB tool reveals that states are moving in the right direction regarding real estate and home loans. In particular, Colorado and Alaska have the lowest rate of serious delinquencies at an average of 0.5 percent. Mississippi and New Jersey have the highest numbers with an average of 2.1 percent of loans currently in default.
Even the highest delinquency rates of severely defaulted loans in the riskiest states falls well below the overall proportion of seriously past due home loans seen in 2010. Those borrowers currently behind on their mortgage payments by less than 90-days totals only about 4.3 percent.
Nevada was drastically affected by the housing market crisis of 2009, with its severely delinquent rate reaching 10.7 percent. As of March 2017, the state has an average 1.2 percent of homeowners who are severely past due. Such numbers show nearly 100 percent improvement in the state.
Florida also saw its severe delinquency rates peak at 9 percent during the financial crisis. The State now has a rate of only 1.4 percent. Both California and Arizona had severely delinquent rates well above 7 percent during the housing market crisis. These states, however, show the most promise in 2017 with housing prices reaching all-time highs, and delinquencies falling to below 1 percent.
The new CFPB tracking tool can serve as a useful way for experts as well as average consumers to investigate local housing market trends in determining what actions to take. By using the interactive graphs and charts provided by the instrument, experts can better warn the public about possible upcoming hardships.