MBA: Mortgage Delinquencies ‘Returned To Typical Pre-Recession Levels’ In Q1

Posted by Patrick Barnard on May 12, 2016 No Comments
Categories : Mortgage Servicing

The residential mortgage delinquency rate (30 days or more past due) during the first quarter fell to 4.77% of all homes with a mortgage, which is basically flat compared with the fourth quarter of 2015, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.

It was the lowest level since the third quarter of 2006, the MBA reports. What’s more, it was 77 basis points lower than one year earlier.

“The delinquency rate of 4.77 percent has returned to typical pre-recession levels and is lower than the historical average of 5.4 percent for the time period from 1979 to the first quarter of 2016,” says Marina Walsh, vice president of industry analysis for the MBA, in a statement.

Foreclosures were started on only 0.35% of all homes with a mortgage during the first quarter – a decrease of one basis point compared with the fourth quarter of 2015 and down 10 basis points from the first quarter of 2015. It was at the lowest number of starts since the second quarter of 2000.

“The rate at which new foreclosures were initiated in the first quarter was 0.35 percent, the lowest in 16 years, and 10 basis points below the historical average of 0.45 percent,” Walsh says. “A total of 28 states and Washington, D.C., either saw decreases or no change in the foreclosure starts rate this quarter, while the remaining 22 states experienced increases in the foreclosure starts rate. Only two of these 22 states have strictly non-judicial processes in place.”

The foreclosure inventory (homes that are in some stage of foreclosure) stood at about 1.74% of all homes with a mortgage as of the end of the first quarter. That’s 48 basis points lower compared with one year earlier. It was the lowest foreclosure inventory rate since the third quarter of 2007, the MBA’s research shows.

“Continuing a consistent downward trend that began in the second quarter of 2012, the foreclosure inventory rate fell again in the first quarter of 2016 to 1.74 percent, a decrease of three basis points from the previous quarter,” Walsh says. “Of the 50 states and Washington, D.C., 44 states either had no change or saw declines in the foreclosure inventory rate.

“While the overall foreclosure inventory rate for the first quarter was considerably lower than the peak of 4.64 percent at the worst of the crisis, it was still above the average of 1.5 percent for the time period between 1979 and the first quarter of 2016,” Walsh adds. “The good news is that foreclosure inventory rates continued to decline in both judicial and non-judicial states this quarter. However, about two-thirds of the 20 states with foreclosure inventory rates above the national average were judicial states.”

The serious delinquency rate (90 days or more past due or in the process of foreclosure) was 3.29%, a decrease of 15 basis points compared with the previous quarter and a decrease of 95 basis points from the first quarter of 2015. It was the lowest serious delinquency rate since the third quarter of 2007.

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