MBA: Mortgage Delinquencies Drop To Lowest Level Since 2007

Posted by Patrick Barnard on November 14, 2014 No Comments
Categories : Mortgage Servicing

The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 5.85% in the third quarter – the lowest level since the fourth quarter of 2007 – according to the Mortgage Bankers Association's (MBA) National Delinquency Survey.

It was the sixth consecutive quarter that the delinquency rate decreased, according to the MBA.

The MBA's survey measures the number of loans that are at least one payment past due but does not include loans in the process of foreclosure.

The percentage of loans in the foreclosure process at the end of the third quarter was 2.39%, down 10 basis points from the second quarter and 69 basis points lower than one year ago. This was the lowest foreclosure inventory rate seen since the fourth quarter of 2007.

The percentage of loans on which foreclosure actions were started during the third quarter was unchanged on a seasonally adjusted basis, but increased to 0.44% from 0.40% on an unadjusted basis, an increase of four basis points.

The percentage of loans 90 days or more past due or in the process of foreclosure was 4.65%, a decrease of 15 basis points from the second quarter, and a decrease of 100 basis points from the third quarter of 2013, according to the report.Â

‘We are now back to pre-crisis levels for most measures,’ says Mike Fratantoni, chief economist for the MBA, in a statement. ‘Foreclosure starts were unchanged on a seasonally adjusted basis, but increased slightly in the raw data. Given that this measure reached the lowest level in eight years last quarter, and given the continued decline in delinquency and foreclosure inventory rates, we expect that the increase in the unadjusted starts rate is just regular seasonal fluctuation."

Fratantoni points out that the ‘loans that are seriously delinquent, either 90-plus days late or in the foreclosure process, are primarily loans that were made prior to the downturn: 74 percent of them were originated in 2007 or earlier.’

Meanwhile, ‘loans made in recent years continue to perform extremely well due to the improving market and tight credit conditions; loans originated in 2012 and later accounted for only four percent of all seriously delinquent loans,’ Fratantoni adds.

The report also provides detailed analysis of foreclosure starts and foreclosure inventory for the quarter.

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