MBA: Foreclosure Starts at Lowest Level Since 2003
Mortgage delinquencies and foreclosures continued to drop in the fourth quarter, with foreclosure starts falling to their lowest level since 2003, the Mortgage Bankers Association reported.
The MBA Fourth Quarter National Delinquency Survey reported the delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 4.77 percent of all loans outstanding, its lowest level since third quarter 2006. The delinquency rate decreased by 22 basis points from the previous quarter and by 91 basis points from 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 Vice President of Industry Analysis Marina Walsh said the overall delinquency rate came in lower than the survey’s historical average of 5.2 percent between 1979 and 2015.
MBA said the percentage of loans on which foreclosure actions started during the fourth quarter fell to 0.36 percent, down by two basis points from the third quarter and down by 10 basis points from one year ago. This foreclosure starts rate was at the lowest level since second quarter 2003 and nearly 25 percent off its record high level during third quarter 2009.
The report said the percentage of loans in the foreclosure process at the end of the third quarter fell to 1.77 percent, down 11 basis points from the third quarter and by 50 basis points from 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 3.44 percent, a decrease of 13 basis points from the third quarter and down by 108 basis points from past year. This was the lowest serious delinquency rate since third quarter 2007.
“As the job market has improved and national home prices have rebounded, fewer borrowers were becoming seriously delinquent, while borrowers previously behind on their payments were in a better position to pursue alternative options to resolve delinquent loans,” Walsh said.
Thirty-eight states and the District of Columbia saw decreases in new foreclosures. Of the 12 states that saw increases in new foreclosures, five occurred in states with oil-dependent economies: Oklahoma, North Dakota, Louisiana, Colorado and Texas.
“Mortgage performance is closely connected to job market health and most states saw employment growth continue over the past year,” Walsh said. “The national average continued to trend lower.”
The report said foreclosure inventory rates continued to decline in both judicial and non-judicial states. New Jersey and New York, which lead the nation in foreclosure inventory rates, had the largest year-over-year declines in their respective histories.
The NDS, conducted since 1953, covers 39 million loans on one- to four- unit residential properties, representing 88 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.
