MBA: Hurricanes Drive Up 60-Day and 90-Day Delinquencies in 4Q
The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 5.17 percent of all loans outstanding at the end of the fourth quarter, the Mortgage Bankers Association reported yesterday.
The delinquency rate increased by 29 basis points from the previous quarter and by 37 basis points from a year ago, MBA said in its 4th Quarter National Delinquency Survey. The percentage of loans on which foreclosure actions started during the fourth quarter held 0.25 percent from the third quarter and fell by three basis points from a year ago.
MBA reported mortgage delinquencies increased across all loan types–FHA, VA and conventional–on a seasonally-adjusted basis. However, MBA Vice President of Industry Analysis Marina Walsh noted the 30-day delinquency rate actually dropped by 15 basis points in the fourth quarter, as homeowners affected by Hurricanes Harvey, Irma and Maria either became current on their payments or moved to later stages of delinquency.
Walsh said while the earliest-stage delinquency rate dropped, the 60-day and 90-day delinquency rates did increase in the fourth quarter. “Despite the hurricanes and these quarter-over-quarter results, most states are seeing overall mortgage delinquency rates at lower levels than a year ago,” she said.
Key findings of MBA’s Quarterly National Delinquency Survey:
–The percentage of loans in the foreclosure process at the end of the fourth quarter was 1.19 percent, down 4 basis points from the previous quarter and 34 basis points lower than one year ago.
–The serious delinquency rate–the percentage of loans that are 90 days or more past due or in the process of foreclosure–rose to 2.91 percent in the fourth quarter, up 39 basis points from the previous quarter, but still 22 basis points lower than a year ago. MBA attributed the entire increase in the serious delinquency rate to an increase in the percentage of loans 90 days or more past due.
–The rise in delinquencies from the third to fourth quarter are primarily tied to 90+ day delinquencies for all loan types, but particularly for FHA loans. Compared to the third quarter, the 90+ day delinquency rate on FHA loans rose by 75 basis points, compared to 29 basis points for VA loans and 27 basis points for conventional loans.”
–For hurricane-impacted states, Texas appears to be further along on a path towards recovery. The non-seasonally-adjusted overall mortgage delinquency rate in Texas on all loans dropped by 5 basis points to 7.33 percent in the fourth quarter. Meanwhile, In Florida, the non-seasonally-adjusted overall mortgage delinquency rate on all loans rose by187 basis points to 8.89 percent in the fourth quarter.
“FHA borrowers appear to be impacted not only by the storms but other factors that could be stretching their ability to make payments,” Walsh said. “Regardless of the hurricanes, an increase in delinquencies–particularly FHA delinquencies–off historic lows is not particularly surprising given the seasoning of the loan portfolio, expected higher interest rates, declining average credit scores on new FHA endorsements since 2014 and rising debt-to-income ratios. Mitigating factors include low unemployment and increasing home equity levels that provide homeowners with more options to cure a potential default.”
Walsh said storm-related foreclosure moratoria continue to play a large factor in keeping foreclosure starts at bay, as the fourth quarter saw little movement in either foreclosure starts or foreclosure inventory.
“As forbearance periods expire, an increase in the percent of loans in foreclosure is likely,” Walsh said. “We anticipate it will be several more quarters before the effects of the September hurricanes on the survey results dissipate, especially given extended forbearance periods.”
The NDS, conducted since 1953, covers 39 million loans on one- to four- unit residential properties. Loans surveyed were reported by more than 100 lenders, including mortgage banks, commercial banks and thrifts.
