The delinquency rate for one-to-four
unit residential mortgages decreased for the fifth consecutive time in the
second quarter of 2014. The resulting
seasonally adjusted rate of 6.04 percent of all such loans outstanding was the
lowest since the fourth quarter of 2007.
The rate is down 7 basis points from the first quarter and is 92 basis
points below the level in the second quarter of 2013.
The Mortgage Bankers Association
released these results from its National Delinquency Study on Thursday. The delinquency rate includes loans that are
30 or more days past due but not yet in foreclosure. Loans that are in foreclosure represented
2.49 percent of mortgages in the second quarter, down 16 basis points from the
previous period and 84 basis points from a year earlier. It was the lowest foreclosure inventory rate
since the first quarter of 2008.
The serious delinquency rate, loans that
are 90 or more days past due or in foreclosure, was 4.80 percent, 24 basis
points below the rate last quarter and 108 basis points lower than in the second
quarter of 2013. Foreclosure starts in
the second quarter were at a rate of 0.40 percent, down from 0.45 percent and
the lowest rate since mid-2006.
Loans originated in 2007 and earlier
comprised 75 percent of seriously delinquent loans. Loans originated in 2011 and later accounted
for only six percent of seriously delinquent loans.
and foreclosure rates fell to their lowest levels in more than six years, and
the rate of new foreclosure starts is at its lowest level since 2006," said
Mike Fratantoni, MBA's Chief Economist. "Strong job growth and
continued increases in home prices in most markets have been the main
contributors to these steady improvements in mortgage performance.
He said that a new trend that has emerged in the number of prime adjustable
rate mortgages (ARMs) serviced. "Many of
these are recently originated jumbo loans that are kept on banks' balance
sheets. However a majority of outstanding prime ARM loans were originated
in 2007 and earlier and these loan vintages accounted for over 90 percent of
seriously delinquent prime ARM loans. These older cohorts are keeping the
seriously delinquent numbers elevated despite the inflow of newer loans with
stronger credit quality."
Joel Kan, MBA's Director of Economic Forecasting said some states that were
hardest hit by the foreclosure crisis such as California and Arizona have
foreclosure inventory rates back to pre-crisis levels and less than half the
national rate. "On the other hand,
despite declines last quarter, states with slower-moving judicial foreclosure
regimes, like New Jersey, Florida and New York, have foreclosure inventory
rates two to three times the national average. There were 18 states with
a higher foreclosure inventory rate than the national average, and 15 of those
were judicial states. Judicial states are also starting to see more
foreclosure starts than non-judicial states, whereas there used to be no clear
tendency for either foreclosure regime in the past quarters."
Kan said MBA data shows that the seriously delinquent rate for FHA loans declined
43 basis points over the quarter and 135 basis points relative to last year,
indicating continued improvement. "The seriously delinquent rate for FHA
loans was the lowest since 2008 but still above the long run average of around
four percent. The FHA foreclosure starts rate declined nine basis points
to 0.55 percent and was at the lowest level since 2000, as well as below the
long run average of 0.6 percent."