MBA: Mortgage Delinquencies Down in 2Q; Foreclosures at 30-Year Low
The Mortgage Bankers Association reported delinquency rates for mortgage loans fell in the second quarter from the first quarter, but rose from a year ago, while foreclosure actions fell to their lowest level in more than 30 years.
The quarterly MBA National Delinquency Survey said delinquency rates for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 4.36 percent of all loans outstanding at the end of the second quarter, down 27 basis points from the previous quarter, but up 12 basis points from one year ago.
MBA said the percentage of loans on which foreclosure actions were started dropped four basis points from the first quarter to 0.24 percent, its lowest level since second quarter 1987.
“We continue to see improvement in the overall mortgage delinquency rate as the impact of the hurricanes from one year ago lessens, particularly for conventional loans,” said Marina Walsh, MBA Vice President of Industry Analysis. “The economic outlook continues to support good loan performance. Gross domestic product grew at a 4.1 percent rate, the unemployment rate was at an 18-year low, and job growth is averaging over 210,000 jobs per month, so far this year. This means the economy is close to full employment.”
Walsh noted, however, that MBA continues to monitor factors that could contribute to a rise in delinquencies in future quarters. “Like past natural disasters, the wildfires in California may have a negative impact,” she said. “Other factors include the aging of servicing portfolios as mortgage refinances slow, and the changing credit quality among certain loan types.”
Key findings of the NDS:
–Mortgage delinquencies dropped across all stages of delinquency in the second quarter from the first quarter. The 30-day delinquency rate dropped two basis points from the previous quarter, while 60-day and 90-day delinquency buckets dropped by eight and 18 basis points, respectively.
–The delinquency rate for conventional loans decreased by 33 basis points over the previous quarter to 3.45 percent. The FHA delinquency rate fell by 32 basis points to 8.70 percent; the VA delinquency rate fell by 35 basis points to 3.97 percent.
–From a year ago, the delinquency rate for conventional loans dropped by two basis points, while the FHA delinquency rate increased by 76 basis points and the VA delinquency rate increased by 25 basis points.
–The percentage of loans in the foreclosure process at the end of the second quarter fell to 1.05 percent, down 11 basis points from the first quarter and 24 basis points from a year ago. This was the lowest foreclosure inventory rate since third quarter 2006.
–The serious delinquency rate (percentage of loans 90 days or more past due or in the process of foreclosure) fell to 2.30 percent in the second quarter, a decrease of 31 basis points from the first quarter and 19 basis points from a year ago.
–Both Texas and Florida continue to recover from last summer’s hurricanes. The non-seasonally adjusted overall mortgage delinquency rate in Texas dropped by 26 basis points to 5.36 percent in the second quarter. Prior to the hurricane one year ago, the overall delinquency rate for Texas was 5.05 percent. In Florida, the non-seasonally-adjusted overall mortgage delinquency rate on all loans dropped by 139 basis points to 5.20 percent in the second quarter. Prior to the hurricane one year ago, the overall delinquency rate for Florida was 4.07 percent.
–The recovery process for FHA borrowers in Texas and Florida is improving at a slower pace. The FHA non-seasonally-adjusted mortgage delinquency rate in Texas was 10.53 percent in the second quarter, compared to 9.56 percent one year ago. In Florida, the non-seasonally-adjusted FHA mortgage delinquency rate was 9.01 percent, compared to 6.16 percent one year ago.
MBA noted while forbearance is in place for many borrowers affected by these storms, the survey asks servicers to report these loans as delinquent if the payment was not made based on the original terms of the mortgage regardless of any forbearance plans in place.
The NDS, conducted since 1953, covers 38 million loans on one- to four- unit residential properties. Loans surveyed were reported by over 100 lenders, including mortgage bank, commercial banks and thrifts.
