The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 5.30% of all loans outstanding at the end of the second quarter – down 24 basis points from the first quarter and down 74 basis points from the second quarter of 2014, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey.
It was the lowest delinquency rate since the second quarter of 2007.
Meanwhile, about 2.09% of all loans were in some stage of foreclosure as of the end of the second quarter. That's down 13 basis points compared to the first quarter and down 40 basis points compared to the second quarter of 2014, the MBA reports.
It was the lowest foreclosure inventory rate since the fourth quarter of 2007.
The percentage of loans on which foreclosure actions were started during the second quarter was 0.40%, a decrease of five basis points compared to the first quarter but basically unchanged relative to the second quarter of 2014.
The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 3.95%, a decrease of 29 basis points from the previous quarter, and a decrease of 85 basis points from the second quarter of 2014. This was the lowest level since the fourth quarter of 2007.
Marina Walsh, vice president of industry analysis for the MBA, says ‘nearly every state in the nation reported declining foreclosure inventory rates over the second quarter.’
‘The overall delinquency rate for Federal Housing Administration [FHA] loans dropped to 9.01 percent in the second quarter from 9.10 percent, as the 90 day or more delinquent category declined,’ Walsh says in a statement. ‘However, the 30-day and 60-day delinquency rate was up by a combined 10 basis points from the previous quarter. In addition, the FHA foreclosure inventory rate rose to 2.68 percent in the second quarter, four basis points higher than the previous quarter but still 13 basis points lower than a year ago. As more recent loan vintages begin to age and as older vintages enter the foreclosure process, we may see volatility in FHA delinquency and foreclosure rates.’
Walsh points out that although only 40% of all mortgage loans serviced are in judicial states, ‘these states account for a growing majority of loans in foreclosure.’
‘For states where the judicial process is more frequently used, 3.41 percent of loans serviced were in the foreclosure process, compared to 1.15 percent in non-judicial states,’ she says. ‘States that utilize both judicial and non-judicial foreclosure processes had a foreclosure inventory rate closer that of the non-judicial states at 1.36 percent.’
New Jersey, New York, and Florida had the highest percentage of loans in foreclosure in the second quarter.
‘Despite a 36 basis point decline in foreclosure inventory over the first quarter, New Jersey's foreclosure inventory rate was still 7.31 percent, while New York, which had a 20 basis point decline over the first quarter had the second highest foreclosure inventory rate at 5.31 percent,’ Walsh says. ‘Both states primarily use a judicial foreclosure process.’
Although it is still lingering, the foreclosure inventory is shrinking faster than it was in a majority of the judicial states.
‘Legacy loans continued to account for the majority of all troubled mortgages,’ Walsh adds. ‘Seventy-three percent of the loans that were seriously delinquent – either more than 90 days delinquent or in the foreclosure process – were originated before 2008, even as the overall rate of serious delinquencies for those cohorts decreased.’