I would describe the correlation between the two as significant but not overwhelming. However, we must also recognize that there is a real world lag between the loss of income caused by a firing or a decrease in available hours, and any subsequent mortgage delinquencies. Perhaps a 4 or 6 quarter shift in the U6 data would show a tighter correlation.

The chart (below) goes a long way in challenging those who live on anecdotal tales of gainfully employed profligate spenders who are living the high life by not paying their mortgages. To the contrary, the data shows that the income loss associated with unemployment (and underemployment) is a significant factor in mortgage delinquency.

Additionally, note the two outliers in terms of delinquency: Florida and Nevada, with the former a recourse (but homestead) state and the latter a non recourse state.

Unemployment Correlation with Mortgage Delinquency

click for chart

chart courtesy of CalculatedRisk

If anyone wants to produce evidence of the contrary, I am willing to post an alternative explanation.

Source:

States: U-6 Unemployment Rate vs. Mortgage Delinquency Rate CalculatedRisk , May 23, 2010

http://www.calculatedriskblog.com/2010/05/states-u-6-unemployment-rate-vs.html