MBA: Foreclosures at Lowest Rate Since 2005
Delinquency rates for mortgage loans on one-to-four-unit residential properties fell to their lowest rate since 2007, while mortgage foreclosures fell to their lowest rate since 2005, the Mortgage Bankers Association reported yesterday.
The MBA 3rd Quarter National Delinquency Survey said mortgage delinquencies fell to a seasonally adjusted 4.99 percent of all loans, the lowest level since first quarter 2007. The delinquency rate fell by 31 basis points from the previous quarter and by 86 basis points from a 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 in the foreclosure process at the end of the third quarter was 1.88 percent, down by 21 basis points from the second quarter and by 51 basis points lower than a year ago, representing the lowest foreclosure inventory rate since third quarter 2007.
The report said the percentage of loans on which foreclosure actions were started during the third quarter fell to 0.38 percent, a decrease of two basis points from the previous quarter and six basis points from one year ago. The foreclosure starts rate is at the lowest level since the second quarter of 2005.
MBA said the serious delinquency rate–the percentage of loans 90 days or more past due or in the process of foreclosure–fell to 3.57 percent, a decrease of 38 basis points from the second quarter and 108 basis points from last year. This was the lowest serious delinquency rate since third quarter 2007.
“A nationwide housing market recovery, resolution of long-standing troubled loans that eventually proceeded through the foreclosure process and an improving employment outlook that provided distressed borrowers viable alternatives to foreclosure all contributed to the lower delinquency and foreclosure numbers,” said MBA Vice President of Industry Analysis Marina Walsh.
MBA said the overall delinquency rate for FHA loans dropped to 8.91 percent in the third quarter from 9.01 percent in the second quarter, as the 90-day or more delinquent category declined by 20 basis points and more than offset an 11 basis point increase in the 30-day delinquency rate. In addition, the FHA foreclosure inventory rate dropped to 2.65 percent in the third quarter, from 2.68 percent in the second quarter and 2.73 percent a year ago.
Walsh noted while only 40 percent of loans serviced are in judicial states (which have lengthier foreclosure processes), these states account for a majority of loans in foreclosure. For states where the judicial process is more frequently used, 3.01 percent of loans serviced were in the foreclosure process, compared to 1.06 percent in non-judicial states. States that use both judicial and non-judicial foreclosure processes had a foreclosure inventory rate closer that of the non-judicial states at 1.26 percent.
The report further noted as has been the case since fourth quarter 2012, New Jersey, New York, and Florida had the highest percentage of loans in foreclosure in the nation. “All three of these states primarily use a judicial foreclosure process,” Walsh said.
The report said New Jersey’s foreclosure inventory rate remained the highest in the nation at 6.47 percent, but noted its 84 basis point decline in the foreclosure inventory rate was the largest decline experienced by any state in the third quarter and the second largest decline reported for New Jersey in any quarter.
New York’s foreclosure inventory rate dropped to 4.77 percent in the third quarter, from 5.31 percent in the second quarter. This 54 basis point decline in the foreclosure inventory rate was the largest decline reported for New York in any quarter.
Florida’s foreclosure inventory rate dropped to 3.46 percent in the third quarter, from 4.24 percent in the second quarter, a decline of 78 basis points. The report said while this decline was substantial, Florida experienced its largest decline in the foreclosure inventory rate–110 basis points–two years earlier in third quarter 2013.
Legacy loans continued to account for the majority of all troubled mortgages, the report said. Across all loans, 80 percent of the loans that were seriously delinquent were originated before the year 2009, even as the overall rate of serious delinquencies for those cohorts decreased.
The NDS, conducted since 1953, covers 40 million loans on one- to four- unit residential properties, representing 88 percent of all first-lien residential mortgage loans outstanding in the U.S. Loans surveyed were reported by more than 100 lenders, including mortgage bank, commercial banks and thrifts.
