WASHINGTON, D.C. — The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 6.96 percent of all loans outstanding at the end of the second quarter of 2013, the lowest level since mid-2008. The delinquency rate dropped 29 basis points from the previous quarter, and 62 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency 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 during the second quarter decreased to 0.64 percent from 0.70 percent, a decrease of six basis points and reached the lowest level since the first quarter of 2007 and less than half of the all-time high of 1.42 percent reached in September 2009. The percentage of loans in the foreclosure process at the end of the second quarter was 3.33 percent down 22 basis points from the first quarter and 94 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, was 5.88 percent, a decrease of 51 basis points from last quarter, and a decrease of 143 basis points from the second quarter of last year. However, as with last quarter’s results, the improvement in the seriously delinquent percentages may be slightly less than stated because at least one large specialty servicer that has received a number of loan transfers does not participate in the MBA survey.
The combined percentage of loans at least one payment past due or in foreclosure was at its lowest level in five years, decreasing to 10.13 percent on a non-seasonally adjusted basis, 17 basis points lower than last quarter and 149 basis points lower than the same quarter one year ago.
“For most of the country, delinquencies and foreclosures have returned to more normal historical levels. Most states are at or only slightly above longer-term averages, and some of the worst-hit states are showing improvement. For example while 10 percent of the mortgages in Florida are somewhere in the process of foreclosure, this is down considerably from the high of 14.5 percent two years ago. While Florida leads the country in the rate of foreclosures started, that rate of 1.1 percent is the lowest since mid-2007 and half of what it was three years ago,” said Jay Brinkmann, MBA’s Chief Economist and SVP of Research and Economics.
“Some of the highest numbers are in New York, New Jersey and Connecticut. The rate of new foreclosures in New York hit an all-time high during the second quarter and is now essentially equal with Florida. The percentage of loans in foreclosure in New Jersey remains about the same as the rates in California, Arizona and Nevada combined. The foreclosure percentages in Connecticut are back to near all-time highs for that state.
“In contrast, foreclosure starts fell or were unchanged in 43 states and the foreclosure inventory rate either improved or was unchanged in 45 states.
“States with a judicial foreclosure system continue to bear a disproportionate share of the foreclosure backlog. While the percentage of loans in foreclosure dropped in both states with judicial systems and states with nonjudicial systems, the average rate for judicial states was 5.59 percent, triple the average rate of 1.86 percent for nonjudicial states. Both declined to recent lows, with judicial states seeing the lowest foreclosure inventory since 2009 and nonjudicial states seeing the lowest foreclosure inventory since 2007.
“While overall economic growth and jobs creation have been less than robust, the improvements have not been consistent across the country or all sectors. The result is that those states with the weakest economic growth and the most sclerotic foreclosure systems have seen the slowest improvements in delinquency and foreclosure rates.” Brinkmann said.
Change from last quarter (first quarter of 2013)
On a seasonally adjusted basis, the overall delinquency rate decreased for all loan types except FHA loans. The seasonally adjusted delinquency rate decreased 23 basis points to 3.54 percent for prime fixed loans and decreased 87 basis points to 6.75 percent for prime ARM loans. For subprime loans, the delinquency rate decreased 131 basis points to 18.81 percent for subprime fixed loans and 271 basis points to 21.01 percent for subprime ARM loans. The delinquency rates for VA loans fell by 20 basis points to 6.14 percent while the FHA delinquency rate rose by six basis points to 11.03 percent. FHA was the only loan category to see an overall increase in delinquency rates, led by a 26 basis point increase in the FHA 30-day delinquency rate. With the continuing growth of the FHA book in recent years, several vintages have not yet reached their expected peak delinquency rate.
The percent of loans in foreclosure, also known as the foreclosure inventory rate, decreased from last quarter to 3.33 percent. The foreclosure inventory rate for prime fixed loans decreased 27 basis points to 1.71 percent and the rate for prime ARM loans decreased 56 basis points from last quarter to 5.39 percent. For subprime loans, the rate for subprime fixed loans increased 39 basis points to 9.13 percent and the rate for subprime ARM loans decreased one basis point to 16.26 percent. The foreclosure inventory rate for FHA loans decreased 28 basis points to 3.68 percent while the rate for VA loans decreased 10 basis points to 1.88 percent.
The non-seasonally adjusted foreclosure starts rate decreased six basis points for prime fixed loans to 0.32 percent, 11 basis points for prime ARM loans to 0.83 percent, eight basis points for subprime fixed to 1.64 percent, 13 basis points for FHA loans to 0.81 percent and two basis points for VA loans to 0.47 percent. The foreclosure start rate increased 59 basis points to 2.90 for subprime ARM loans.
Change from last year (second quarter of 2012)
Given the challenges in interpreting the true seasonal effects in these data when comparing quarter to quarter changes, it is important to highlight the year over year changes of the non-seasonally adjusted results.
Compared with the second quarter of 2012, the foreclosure inventory rate decreased 71 basis points for prime fixed loans, 292 basis points for prime ARM loans, 102 basis points for subprime fixed, 486 basis points for subprime ARM loans, 55 basis points for FHA loans and 40 basis points for VA loans.
Over the past year, the non-seasonally adjusted foreclosure starts rate decreased 21 basis points for prime fixed loans, 72 basis points for prime ARM loans, 34 basis points for subprime fixed, 30 basis points for subprime ARM loans, 72 basis points for FHA loans and one basis point for VA loans.
