Making Mountains Out Of Molehills -- Mortgage Delinquency Rates In Fossil Energy-Heavy States -- August 16, 2016

Following the housing bubble bust, at its peak in the first quarter of 2010, the "nationwide"  delinquency rate for one-to-four-unit residential properties was 10.06 percent.

Currently, the nationwide delinquency rate is about 4.66% as of the end of the second quarter, a decrease of 11 basis points compared with the first quarter, and a decrease of 64 basis points compared with 2Q15.

The current delinquency rate, the delinquency rate for 2Q16, is the lowest quarterly rate since 2Q06, ten years ago.

So, to recap, for 30-day delinquencies:

• at its peak, back in 2010, the nationwide mortgage delinquency rate was 10.06%
• the current nationwide average rate is 4.66%, the lowest since the end of the second quarter. 

Those numbers come from mortgage.orb in a story published today.

For 60-day delinquencies, the nationwide rate is even lower, 2.82%, according to BusinessInsier.com.

It must have been a slow news day or the reporter was struggling to find a freudenschade story about the current state of the energy industry. That's the only way I can account for the story at the link.

After deep research, the author of that article was finally able to find only three states where the mortgage delinquency rate had increased from a year ago.

Surprisingly, Texas and Oklahoma were not mentioned.

He said the three states were all in the oil patch, which is sort of, but barely true: Wyoming, West Virginia, and North Dakota. Two of the three are better known for coal than for oil.

The war on coal is the long pole in the tent for West Virginia and Wyoming. Seriously, only North Dakota can be considered in the "oil patch." 

So, how is North Dakota doing?

The national rate, again, for 60-day mortgage delinquencies, is 2.82%

North Dakota: 1.05%

Less than half the national average.

And that generated the story at the link.

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I love the way writers obfuscate these stories. This was how the writer reported the North Dakota rate: "The delinquency rate in North Dakota is 1.05%, up 10.8% from the previous year."

I would have missed it, or could have missed it, had a reader not pointed it out to me, or if I had not re-read that sentence. The "10.8%" jumps out at you. In the big scheme of things, it's meaningless.

Doing the arithmetic, North Dakota's delinquency rate was 0.95% last month -- yes, less than 1%, compared with a nationwide rate of 10% (30-day delinquencies) following the housing bubble. Most folks who have been paying attention know the cause of that housing bubble. Some banks have only now gotten past this.

Ten percent of zero is still zero, and 10% of something less than 1% is still barely 1%. But apparently it was enough to make it worth writing the story.

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In the big scheme of things, this is truly making a mountain out of a molehill.

In the big scheme of things, this isn't even "North Dakota" the writer is writing about when he is writing about the state's energy sector. He's writing about four counties, and maybe three cities: Williston, Watford City, and Dickinson.

That's it.

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The fact that Texas, Oklahoma, and Alaska have not seen an increase in mortgage delinquency rates, year over year -- all of which are clearly in the "oil patch"-- sort of takes the wind out of Matt's article.

In fact, at the source, in a map where the darker the blue, the higher the delinquency, North Dakota is the palest blue on the map; it appears only Colorado comes close to North Dakota's rate. The map, by the way, shows ND's delinquency rate to be 0.95%, not the 1.05% stated in the article. YoY change was 2.6%. Colorado: 1.04%, down 27% YoY. New York state where fracking is banned: 3.51%, well above the national average and 3x the ND rate, but also down a whopping 27% YoY. Texas, the oiliest state in the oil patch, has a delinquency rate of only 2.12%, and that rate is down almost 17% YoY.

And then this, the source clearly states that West Virginia's rate actually decreased almost 3% YoY, whereas Matt said it was one of three states where the rate had actually increased. Wyoming, too, the rate decreased almost 5% YoY, and Matt said it increased. Matt and I must be looking at different things. You can check it out yourself at the TransUnion site that Matt linked.

Based on this data, the oil patch, and the entire fossil fuel energy patch is not doing too badly.

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As much as folks complain about man-camps, advocates of man-camps should point out that delinquency rates could have been a whole lot worse had workers not had man-camps to turn to, but had to buy houses. As soon as they were out of a job, they would have left the state, resulting in more mortgage delinquencies. No one can say that for sure, but man-camps may have prevented any number of other problems.

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I'll take the 1% mortgage delinquency rate as a good news story. The bankers, the real estate industry, the roughnecks are doing a great job not letting things get out of hand. By the way, it would be interesting to see the rate broken down by county in North Dakota. Or maybe not. LOL. 

By the way, for the record, current 60-day delinquency rates according to the Matt Turner story in Business Insider:

• nationwide: 2.3%
• West Virginia (think war on coal): 2.54% 
• Wyoming (think war on coal; lots of federal land): 1.57%
• North Dakota, home of Boomtown USA: 1.05% (less than half the national average)