Demerle & Associates, P.C.

ATTOM: in Q3 2024, percentage of mortgaged U.S. homes considered "equity-rich" -- i.e., value of property at least 50 percent more than combined loan balances that the property secures -- dropped slightly from Q2 2024 (to 48.3 from 49.2). Vermont, Connecticut and Rhode Island are among top five (5) states in the U.S. that saw the largest percent increases in residential home equity. Meanwhile, Vermont (86.4), Maine (62.2), New Hampshire (61.1) and Rhode Island (60.6) led the nation in the percentage of equity-rich mortgaged residential properties. The ultra-low-interest mortgages originated during the pandemic continue to discourage homeowners from selling their homes. As a result, the historically small housing inventory is keeping home values elevated. For the last few years, the U.S. real estate market -- and the U.S. economy generally -- have ignored prognostications of doom. Record levels of debt? Stock market goes to new highs. Inflation hammers U.S. consumers for three (3) consecutive years following the pandemic? U.S. employment rate continues to hover at historic lows. These valuations will remain as long as the fundamental imbalance between the number of homes for sale and the numbers of potential buyers continues. That said, home equity values remain one (1) of the few bright spots in an increasingly darkening U.S. economy. According to the NY Fed, in Q2 2024 consumer debt reached an all-time high of $17.8 trillion. According to the St. Louis Fed, in the last 3.5 years outstanding credit card balances increased by 46 percent; by comparison, in the preceding 10 years credit card balances increased by only 32 percent. Also, credit card delinquencies have reached a percentage high (3.25) not seen since 2011. It is no coincidence that bankruptcy filings have increased in each of the last two (2) years. In short, U.S. consumers are borrowing to hold their economic position but they are slipping. Meanwhile, storm clouds are growing in the U.S. commercial sector. The business loan delinquency rate in Q2 2024 (1.13 percent) reached a level not seen since Q2 2018 (1.08 percent). The truly ominous signs appear in the commercial real estate space where the default rate in Q2 2024 (1.42 percent) just eclipsed a rate seen nine (9) years ago (1.41 percent in Q1 2015). Commercial lenders are facing approximately $1 trillion worth of commercial real estate loans maturing each year from 2024 to 2028. #mortgage #foreclosure #defaultservicing See https://lnkd.in/e5zcty-X

ICE: in September 2024, U.S. mortgage delinquency rate increased 14 basis points to 3.48 percent, the fourth consecutive year-over-year rise in mortgage delinquencies, the longest streak since 2018 excluding the initial impact of the COVID pandemic. Serious delinquencies -- i.e., 90+ days past due -- climbed to 5.9 percent, a 16-month high, while 60-day delinquencies reached their highest level since January 2021. Vermont and Rhode Island are among the top five (5) states in the nation with largest percentage decreases in mortgage delinquencies in the last 12 months. So, while the U.S. foreclosure rate remains near historic lows, the pre-foreclosure delinquency rates suggest a U.S. consumer under considerable economic stress. According to the Federal Reserve Bank of New York, in Q2 2024 U.S. household debt ticked up to $17.8 trillion; home equity lines of credit balances have increased for nine (9) consecutive quarters dating back to Q1 2022 as U.S. consumers continue to pull money out of their equity-rich properties. See https://lnkd.in/gfmrKps. Meanwhile, weekly U.S. bankruptcy filings in 2024 have exceeded filings in 2023 in 40 of the 42 weeks of this year. See https://lnkd.in/g-mRJqqr. #mortgage #foreclosure #defaultservicing https://lnkd.in/eHXHB46t

ATTOM: U.S. commercial foreclosures in September 2024 increased 15 percent from the prior month and 48 percent from a year ago. Writes ATTOM, "This recent surge likely reflects ongoing financial challenges in the commercial real estate market, with factors such as rising interest rates, inflation, and shifts in demand for commercial spaces contributing to the increase." California, New York, Florida, Texas and Pennsylvania led the nation in commercial foreclosures last month. #mortgage #foreclosure #defaultservicing See https://lnkd.in/eNgvFUg5

ATTOM: U.S. residential foreclosures in Q3 2024 down 13 percent from same period in 2023 and down two (2) percent from prior quarter. In New England, New Hampshire led the U.S. in shortest foreclosure timelines (165 days) while Rhode Island was 4th in the U.S. for longest foreclosure timelines (1880 days). #mortgage #foreclosure #defaultservicing See https://lnkd.in/gjET2SEW

BANKRUPTCYWATCH: Last week, more Americans and American companies filed for bankruptcy protection (1) than in any week in 2023, and (2) during late summer which is typically a low-filing period on the calendar. Last week’s less-than-stellar jobs report coupled with the increasing number of defaults in the commercial loan space and with historic consumer debt levels show an economy under enormous stress. See https://lnkd.in/e53K4jVF

BANKRUPTCY WATCH: U.S. bankruptcy filings continue to outpace the number of filings at this time last year: * Ch. 7 up 12 percent * Ch. 13 up five (5) percent * Ch. 11 up more than 31 percent. If past is prologue, then we will see bankruptcy filing spikes in early September, early October and early December. Query whether the long-predicted-but-yet-to-happen "crash" in the commercial debt space will accelerate the pace of filings as $1.5 trillion in commercial debt matures into a higher interest rate environment, leaving borrowers with few options to refinance. #mortgage #bankruptcy #defaultservicing See https://lnkd.in/e-5-ETHc

ICE: U.S. residential foreclosure delinquency rate saw a monthly increase of 14.5%, the second-highest level in 18 month. However, serious delinquencies (loans 90+days past due) were down 8.5% YoY and down more than 10% from pre-pandemic levels. ICE sees the delinquency increase as a "calendar-driven spike." #mortgage #foreclosure #defaultservicing See https://lnkd.in/g-XTVdUV

BANKRUPTCYWATCH: The crew at BW have some compelling data. Weekly YOY bankruptcy filings continue to climb across all three (3) major chapters: Chapter 7s up 15.3% (4,687 in 2023 to 5,404 in 2024). Chapter 13s up 6.04% (3,294 in 2023 to 3,493 in 2024). Chapter 11s up 31.08% (74 in 2023 to 97 in 2024). The increase in bankruptcy filings is happening without any corresponding increase in residential foreclosures. (Nationally, U.S. foreclosures in the first half of 2024 are 4.4 percent fewer than after the first half of 2023.) If/when that residential foreclosure rate starts to rise, bankruptcy practitioners will be drinking from a proverbial fire hose. #bankruptcy #defaultservicing See https://lnkd.in/g-mRJqqr

ATTOM: U.S. foreclosure activity in first half of 2024 down 4.4 percent from same time in 2023. Massachusetts among top five (5) states in greatest increase in foreclosure activity. Connecticut among top 10 states in the nation with highest foreclosure activity. #mortgage #foreclosure #defaultservicing See https://lnkd.in/dW87vfR5