MBA: Delinquency Rates Hit 10-Year Low

Delinquency rates for mortgage loans on one- to four-unit residential properties fell to their lowest level since 2006, while foreclosure rates fell to their lowest level in 16 years, the Mortgage Bankers Association reported.

The MBA National Delinquency Survey for the second quarter said the delinquency rate decreased by 11 basis points to a seasonally adjusted rate of 4.66 percent of all loans outstanding at the end of the second quarter, the lowest level since second quarter 2006. From a year ago, the delinquency rate fell by 64 basis points. MBA said the delinquency rate was lower than the historical average of 5.36 percent from 1979 to the present.

MBA said the percentage of loans on which foreclosure actions started during the second quarter fell to 0.32 percent, down by three basis points from the first quarter and by eight basis points from a year ago. This foreclosure starts rate was at its lowest level since second quarter 2000.

The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the second quarter fell to 1.64 percent, down 10 basis points from the previous quarter and 45 basis points from a year ago. The foreclosure inventory rate fell to 1.64 percent, its lowest level since second quarter 2007.

MBA said the serious delinquency rate–the percentage of loans 90 days or more past due or in the process of foreclosure–fell to 3.11 percent, down by 18 basis points from previous quarter and by 84 basis points from last year. The serious delinquency rate reached its lowest level since third quarter 2007.

“Mortgage performance improved again in the second quarter primarily because of the combination of lower unemployment, strong job growth and a continued nationwide housing market recovery,” said Marina Walsh, MBA Vice President of Industry Analysis. “The mortgage delinquency rate tracks closely with the nation’s improving unemployment rate. In the second quarter, the mortgage delinquency rate was 4.66 percent, while the unemployment rate was 4.87 percent. By comparison, at its peak in the first quarter of 2010, the delinquency rate was 10.06 percent and the unemployment rate stood at 9.83 percent.”

MBA said the FHA delinquency rate dropped to 8.46 percent, its lowest level since 2000. FHA loans saw a 15 basis point drop in the percentage of new foreclosures, which pushed the rate down to 0.48 percent, its lowest level since 1993. The FHA foreclosure inventory rate dropped 26 basis points from the previous quarter to 2.15 percent, its lowest level since 2001.

Forty-seven states and the District of Columbia either had no change or saw declines in the foreclosure inventory rate in the second quarter. New Jersey and New York had the highest percentage of loans in foreclosure, at 5.97 percent and 4.48 percent, respectively. Florida’s percentage of loans in foreclosure dropped to 2.72, “a significant improvement over 2011, when it was the state with the nation’s highest percentage of loans in foreclosure at 14.49 percent,” Walsh said. California’s percentage of loans in foreclosure fell 0.66, eighth-lowest among all states.

Beginning in the first quarter, MBA combined all non-government loans into a single conventional loan category. Conventional loans, which make up 78 percent of the NDS sample, saw a 14 basis point decrease in delinquency rate, a seven basis point decrease in the percent of loans in foreclosure. The foreclosure starts rate remained unchanged.

The NDS, conducted since 1953, covers 38 million loans on one- to four-unit residential properties. Loans surveyed were reported by more 100 lenders, including mortgage bank, commercial banks and thrifts.