MBA: 4Q Mortgage Delinquencies Drop to 18-Year Low
The Mortgage Bankers Association reported the delinquency rate for mortgage loans on one-to-four-unit residential properties fell in the fourth quarter to their lowest level since 2000, while foreclosure rates ticked up slightly.
The MBA 4th Quarter National Delinquency Survey reported overall mortgage loan delinquency rates fell to a seasonally adjusted rate of 4.06 percent, down by 41 basis points from the third quarter and by 111 basis points from one year ago. The percentage of loans on which foreclosure actions started in the fourth quarter rose by two basis points to 0.25 percent.
MBA reported delinquency rates dropped from the previous quarter and on a year-over-year basis across all loan types–conventional, FHA and VA–and across all stages of delinquency–30 days, 60 days and 90+ days.
“With the unemployment rate near 50-year lows, wage growth trending higher and household debt levels relative to disposable incomes at 35-year lows, homeowners are in great shape, and mortgage performance is quite strong,” said Marina Walsh, MBA Vice President of Industry Analysis.
The report noted improvements in states adversely impacted by natural disasters over the past. For example, the delinquency rate in Florida dropped by 458 basis points on a year-over-year basis, once the effects of Hurricane Irma dissipated. Similarly, the delinquency rate in Texas dropped by 218 basis points in the fourth quarter from a year ago, once the effects of Hurricane Harvey dissipated. States affected by more recent storms such as North Carolina, South Carolina, Mississippi, Arkansas and Alabama showed improvements at the end of last year, after experiencing delinquency spikes in the third quarter.
“Thus far, Florida’s Hurricane Michael in October, as well as the California fires in November, have had limited impact on the overall delinquency rates in those states,” Walsh said.
The two basis-point uptick in foreclosure starts were likely driven by the lifting of foreclosure moratoriums in states impacted by natural disasters, Walsh said, in combination with severely delinquent loans that finally moved into the foreclosure process, particularly those loans in judicial states where foreclosure procedures are much slower moving.
Other key report findings:
–From the third quarter, the 30-day delinquency rate decreased by 22 basis points to 2.29 percent; the 60-day delinquency rate decreased three basis points to 0.74 percent; and the 90-day delinquency bucket decreased 15 basis points to 1.03 percent.
–From the third quarter, the delinquency rate for conventional loans decreased by 37 basis points to 3.19 percent. The FHA delinquency rate decreased by 31 basis points to 8.65 percent; and the VA delinquency rate decreased by 45 basis points, to 3.71 percent.
–Year over year, mortgage delinquencies dropped across all loan types. The delinquency rate for conventional loans dropped by 100 basis points, while the FHA and VA delinquency rates dropped 173 basis points and 78 basis points, respectively.
–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 fourth quarter was 0.95 percent, down four basis points from the third quarter and 24 basis points lower than one year ago. This was the lowest foreclosure inventory rate since first quarter 1996.
–The serious delinquency rate (the percentage of loans 90 days or more past due or in the process of foreclosure) fell to 2.06 percent, a decrease of seven basis points from the third quarter and a decrease of 85 basis points from a year ago.
–States most impacted by the September storms saw their overall mortgage delinquency rates drop in the fourth quarter (after a spike in the third quarter): Mississippi (41 basis points), South Carolina (33 basis points), North Carolina (28 basis points), Alabama (28 basis points) and Arkansas (17 basis points).
–On a year-over-year basis, Texas and Florida posted the biggest improvements in their overall mortgage delinquency rates and are tracking with levels immediately prior to the September 2017 hurricanes. The non-seasonally adjusted overall mortgage delinquency rate in Texas dropped by 218 basis points from last year to 5.15 percent. In Florida, the non-seasonally-adjusted overall mortgage delinquency rate on all loans dropped by 458 basis points from last year, to 4.31 percent.
The NDS, which has been 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. While forbearance may have been in place for many borrowers affected by these storms, MBA’s 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.
