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Residential Department: DataDecoded: July 2013



Delinquencies inch up while foreclosures decline

Mortgage delinquency rates increased in the first three months of this year but the number of homes in foreclosure dropped drastically, according to the first-quarter National Delinquency Survey released by the Mortgage Bankers Association (MBA).

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 7.25 percent of all loans outstanding as of the end of this past first quarter — an increase of 16 basis points from the previous quarter,but down 15 basis points year over year.


Non-seasonally adjusted delinquency rates typically decrease between the fourth quarter and the first quarter, and the delinquency rate decreased 76 basis points to 6.75 percent this past first quarter from 7.51 percent in fourth-quarter ’12, before accounting for the seasonal effect. In MBA’s survey, 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 on which foreclosure actions were started this past first quarter was unchanged at 0.7 percent, the lowest level since second-quarter 2007. This represents a decline of 26 basis points year over year. The percentage of loans in the foreclosure process at the end of this past first quarter was 3.55 percent, the lowest level since 2008 — down 19 basis points from this past fourth quarter and 84 basis points lower year over year.

The serious-delinquency rate — the percentage of loans that are 90 days or more past due or in the process of foreclosure — was 6.39 percent this past first quarter, a decrease of 39 basis points from the fourth quarter, and a decrease of 105 basis points from first-quarter ’12. 

The combined percentage of loans at least one payment past due or in foreclosure was at its lowest point in more than four years, decreasing to 10.3 percent on a non-seasonally adjusted basis. This is 95 basis points lower than the fourth quarter and 103 basis points lower year over year. 

Short-term delinquencies, which are extremely sensitive to changes in the job market, increased this past first quarter, but have been at pre-recession levels for about a year now. We expect this metric will continue to fluctuate based on unemployment numbers. The good news is that jobs are being added at a pace of about 175,000 per month, meaning that many more Americans will be receiving a paycheck.

We view the decrease in 90-day-or-more delinquencies and foreclosure inventory as positive news and an indication that distressed loans are being worked through. As has been a storyline for some time, there continues to be a marked disparity in foreclosure-inventory rates between states where the foreclosure process must go through the court system and those in which the issue is handled between the lender and the borrower.

At the end of this past first quarter, the foreclosure-inventory rate was three times higher on average in the judicial states. Foreclosure backlogs must be alleviated before there can be a return to a normal state of housing.

Overall, we are seeing significant improvement in the foreclosure situation, and despite a little up-and-down in short-term delinquencies, the housing picture is looking good. If the economy continues to add jobs, things only will look better.

To subscribe to MBA’s National Delinquency Survey, contact


David H. Stevens is president and CEO of the Mortgage Bankers Association. Previously, Stevens served as assistant secretary for housing at the U.S. Department of Housing and Urban Development and was appointed commissioner of the Federal Housing Administration by President Obama. Stevens was also president and chief operating officer of Long and Foster Companies, senior vice president at Freddie Mac, and executive vice president at Wells Fargo. Reach the MBA at (202) 577-2700.

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