Both mortgage delinquency rates and the foreclosure
inventory rate hit their lowest points in five years at the end of the fourth
quarter of 2013. The National Delinquency Survey conducted by the Mortgage
Bankers Association (MBA) showed a two basis point decline during the quarter in
the rate of mortgages that are at least one payment past due and a 22 basis point
drop in the number of mortgages in some stage of the foreclosure process.
The delinquency rate for one-to-four
family loans, which does not include loans in foreclosure, was at a seasonally
adjusted rate of 6.39 percent at the end of the fourth quarter compared to 6.41
percent in the third. This was a drop of
70 basis points from the fourth quarter of 2012 and the lowest level since the
first quarter of 2008.
The foreclosure inventory was at 2.86
percent, the lowest since 2008. This was
a -22 basis point change from the third quarter and down 88 basis points from a
Foreclosures were initiated on 0.54
percent of mortgages in the quarter.
This rate was down 7 basis points quarter-over-quarter and was the
lowest rate for foreclosure starts since 2006.
Serious delinquencies, those over 90
days or in foreclosure affected 5.41 percent of mortgage loans. This was a decline of 24 basis points from
the previous quarter and 137 basis points from the same period in 2012.
"We continue to see substantial improvement in
both delinquency and foreclosure rates, with most measures now back to
pre-crisis levels," said Michael Fratantoni, MBA's Chief Economist and Senior
Vice President of Research and Industry Technology. "The delinquency
rate, at 6.39 percent, is more than 3 percentage points lower than its peak of
over 10 percent in 2010 and is edging closer to the historical average of
around 5 percent. The percentage of loans in foreclosure has fallen for
the seventh consecutive quarter, decreasing to 2.86 percent, the lowest level
in six years. The percentage of new foreclosures started, at 0.54
percent, is the lowest in eight years and is back within its typical historical
Forty-nine states and the District of Columbia saw
foreclosure rates decline. Florida still
has the highest foreclosure inventory at 8.56 percent, but the state was at
14.5 percent at its peak. New Jersey and
New York had the second and third highest rate.
MBA said that states with judicial foreclosure systems still account for
most of the loans in foreclosure. Of the 17 states that were above the
national average on this measure 15 were judicial states. While foreclosure inventories in both types
of states are decreasing the average rate is 4.92 percent in judicial states
and 1.52 percent in nonjudicial states.
Fratantoni said that about one fifth of all states saw an increase in foreclosure
starts, but quarterly movements in this measure have often been the result of
changing state laws. The timing associated with these changes and
implementation have resulted in swings in the foreclosure start rate; these are
sometimes offset by changes in the serious delinquency category
FHA delinquencies increased over the quarter by 41
basis points, but are still down 70 points relative to a year ago. The growth was driven by a 37 basis point
increase in loans one payment past due while foreclosure measures declined both
quarter to quarter and year-over-year.
The National Delinquency Survey has been conducted
by MBA since 1953. It covers 41 million
loans, representing approximately 88 percent of all senior residential mortgage
loans on one-to-four family houses. This quarter's loan count saw a decrease of
360,000 loans from the previous quarter, and a decrease of 1,200,000 loans from
one year ago. Loans surveyed were reported by approximately 120 lenders,
including mortgage bankers, commercial banks, and thrifts.