Scotsman Guide > Residential > July 2014 > Department

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Residential Department: DataDecoded: July 2014

 

DataDecoded

Delinquency and foreclosure rates continue to improve

According to the Mortgage Bankers Association’s (MBA) National Delinquency Survey, the delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 6.11 percent of all loans outstanding at the end of this past first quarter, the lowest level since fourth-quarter 2007. The delinquency rate decreased 28 basis points from the previous quarter, and 114 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.

The serious delinquency rate — the percentage of loans that are 90 days or more past due or in the process of foreclosure — was  5.04 percent this past first quarter, a decrease of 37 basis points from the previous quarter and a decrease of 135 basis points from first-quarter 2013. Similar to the previous quarter, 75 percent of seriously delinquent loans were originated in 2007 and earlier, with another 20 percent originated between 2008 and 2010. Loans originated in 2011 and later only accounted for 5 percent of all seriously delinquent loans.

The percentage of loans in the foreclosure process at the end of this past first quarter was 2.65 percent, down 21 basis points from fourth-quarter 2013 and 90 basis points lower year over year. This was the lowest foreclosure inventory rate seen since first-quarter 2008. The percentage of loans on which foreclosure actions were started this past first quarter fell to 0.45 percent from 0.54 percent, a decrease of nine basis points and the lowest level since the second quarter of 2006.

On a seasonally adjusted basis, the overall delinquency rate decreased for all loan types, except for prime fixed loans and U.S. Department of Veteran Affairs (VA) loans. The seasonally adjusted delinquency rate increased six basis points to 3.29 percent for prime fixed loans and decreased 36 basis points to 5.08 percent for prime adjusted-rate mortgage (ARM) loans. For subprime loans, the delinquency rate decreased 72 basis points to 18.8 percent for subprime fixed loans and 71 basis points to 21.62 percent for subprime ARM loans. The delinquency rates for VA loans rose by 12 basis points to 5.41 percent and the Federal Housing Administration (FHA) delinquency rate fell by 65 basis points to 9.82 percent.

The non-seasonally adjusted percentage of loans in foreclosure, also known as the foreclosure inventory rate, decreased from the previous quarter to 2.65 percent. The foreclosure inventory rate for prime fixed loans decreased 10 basis points to 1.46 percent and the rate for prime ARM loans decreased 32 basis points from the previous quarter to 3.53 percent. Regarding subprime loans, the rate for subprime fixed loans decreased 21 basis points to 8.07 percent and the rate for subprime ARM loans decreased 40 basis points to 15.08 percent. The foreclosure inventory rate for FHA loans decreased 27 basis points to an even 3 percent while the rate for VA loans decreased 10 basis points to 1.68 percent.

The non-seasonally adjusted foreclosure-starts rate decreased 4 basis points for prime fixed loans to 0.26 percent, 11 basis points for prime ARM loans to 0.48 percent, 30 basis points for subprime fixed to 1.17 percent, 33 basis points for subprime ARM loans to 1.58 percent, 11 basis points for FHA loans to 0.64 percent, and 8 basis points for VA loans to 0.39 percent.

Given the challenges in interpreting the true seasonal effects in this data when comparing quarter-to-quarter changes, it is important to highlight the year-over-year changes of the non-seasonally adjusted results, as well.

Compared with first-quarter 2013, the foreclosure inventory rate decreased 52 basis points for prime fixed loans, 242 basis points for prime ARM loans, 67 basis points for subprime fixed, 119 basis points for subprime ARM loans, 96 basis points for FHA loans, and 30 basis points for VA loans.

Over the past year, the non-seasonally adjusted foreclosure-starts rate decreased 12 basis points for prime fixed loans, 46 basis points for prime ARM loans, 55 basis points for subprime fixed, 73 basis points for subprime ARM loans, 30 basis points for FHA loans, and 10 basis points for VA loans.

Overall, we saw substantial improvements in mortgage performance across most of the country this past first quarter. That is undoubtedly good news for the real estate market and the general economy. Unfortunately, many judicial states still take significantly longer than the national average to clear foreclosures off their books — a trend we have seen for years now. Those judicial states continue to cast shadows, albeit in a brighter world. Taken on the whole, this past first quarter’s foreclosure and delinquency data bring good news.

To subscribe to MBA’s National Delinquency Survey, contact MBAResearch@mortgagebankers.org.


 

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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