Are Subprime Single Family Residential Foreclosures and Bankruptcies Coming?
I frequently hear that the U.S. does not have the subprime mortgage problem in the housing market today as it did during the Great Recession of 2008-2009. I checked for myself using HUD data. HUD publishes a subprime / FHA single-family loan performance trends report. The earliest data I found in this report dated back to May 2012, which was when the U.S. residential housing market was just starting to recover. The most recent HUD data is from HUD’s October 2023 report. We compare the two tables below: FHA loan performance using 2012 and 2013 data on the left, 2022 and 2023 data on the right.
Comparing the two tables below, one can see that the most recent HUD data (Sep. and Oct. 2023), shows that 30-day and 60-day delinquency rates are ahead of the May 2012-May 2013 pace.
90-day delinquency rates as well as Foreclosure and Bankruptcy rates trail the 2012-2013 period.
The question is, if interest rates remain elevated for a period of months or longer, will the 90-day delinquency rate plus the Foreclosure rate plus the Bankruptcy rate - the combination of which is known as the “Serious Delinquency Rate” - eclipse 2012-2013 levels or perhaps even peak Great Recession levels?
