MBA: Foreclosure Starts at Lowest Level Since 2000

The Mortgage Bankers Association reported mortgage delinquency and foreclosure rates continued to recede, with foreclosure starts falling to their lowest level this century.

The MBA 1st Quarter National Delinquency Survey said the delinquency rate for mortgage loans on one-to-four-unit residential properties remained unchanged from the fourth quarter (4.77 percent, seasonally adjusted) of all loans outstanding. This represents the lowest level since third quarter 2006. The delinquency rate was 77 basis points lower than one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.

MBA reported the percentage of loans on which foreclosure actions started during the first quarter fell to 0.35 percent, down by one basis point from the previous quarter and down 10 basis points from one year ago. This foreclosure starts rate was at the lowest level since second quarter 2000.

The percentage of loans in the foreclosure process at the end of the first quarter fell to 1.74 percent, down three basis points from the previous quarter and 48 basis points lower than one year ago. This was the lowest foreclosure inventory rate seen since third quarter 2007.

The serious delinquency rate–the percentage of loans 90 days or more past due or in the process of foreclosure–fell to 3.29 percent, a decrease of 15 basis points from previous quarter, and a decrease of 95 basis points from a year ago. This was the lowest serious delinquency rate since third quarter 2007.

“The delinquency rate of 4.77 percent has returned to typical pre-recession levels and is lower than the historical average of 5.4 percent for the period from 1979 through the first quarter,” said MBA Vice President of Industry Analysis Marina Walsh.

MBA said 28 states and the District of Columbia either saw decreases or no change in the foreclosure starts rate in the first quarter, while the remaining 22 states experienced increases. Only two of these 22 states have strictly non-judicial processes in place.

The foreclosure inventory rate fell again in the first quarter to 1.74 percent, a decrease of three basis points from the previous quarter, continuing a consistent downward trend that began in second quarter. Forty-four states and the District of Columbia had either had no change or saw declines in the foreclosure inventory rate.

“While the overall foreclosure inventory rate for the first quarter was considerably lower than the peak of 4.64 percent at the worst of the crisis, it was still above the average of 1.5 percent for the time period between 1979 and the first quarter of 2016,” Walsh said. “The good news is that foreclosure inventory rates continued to decline in both judicial and non-judicial states this quarter. However, about two-thirds of the 20 states with foreclosure inventory rates above the national average were judicial states.”

Beginning this quarter, MBA combined all non-government loans into a single conventional loan category. Conventional loans, which make up 78 percent of loans serviced, saw a two basis point increase in delinquency rate, a one basis point increase in the percent of loans in foreclosure and a two basis point decrease in the foreclosure starts rate. Historical data with the split of conventional, FHA and VA loans is now available.

The NDS, conducted since 1953, covers 39 million loans on one- to four- unit residential properties, representing 85 percent of all “first-lien” residential mortgage loans outstanding in the United States. Loans surveyed were reported by more than 100 lenders, including mortgage bank, commercial banks and thrifts.