Mortgage delinquencies (loans that are 60 days or more past due but not in foreclosure) were at about 4.80% as of the end of the fourth quarter – an increase of 28 basis points compared with the third quarter but only three basis points higher compared with the fourth quarter of 2015, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.
The report measures delinquencies on one-to-four-unit residential properties.
The percentage of loans on which foreclosure actions were started during the fourth quarter was 0.28%, a decrease of two basis points compared with the third quarter and a decrease of eight basis points compared with one year earlier.
It was the lowest foreclosure start rate since the fourth quarter of 1988.
The percentage of loans that were in some stage of foreclosure, also known as the foreclosure inventory, was about 1.53%, down two basis points from the third quarter and down 24 basis points compared with the fourth quarter of 2015.
It was the lowest foreclosure inventory rate since the second quarter of 2007.
The serious delinquency rate (loans that are 90 days or more past due or in the process of foreclosure) was 3.13%, an increase of 17 basis points compared with the third quarter but a decrease of 31 basis points compared with the fourth quarter of 2015.
Marina Walsh, vice president of industry analysis for the MBA, says the overall delinquency rate in the fourth quarter increased across all loan types – Federal Housing Administration (FHA), Veterans Affairs (VA) and conventional.
“However, it should be noted that last quarter’s overall delinquency rate was at its lowest level since 2006,” Walsh says. “It is not unexpected that delinquencies could eventually increase off such a low base. We continue to see strong fundamentals in the overall economy, such as rising home values and increased employment, which bodes well for the future performance of FHA, VA and conventional loans.”
The delinquency rate for FHA loans increased 55 basis points – the biggest increase of the government loans – and reached 9.02% in the fourth quarter. That’s up from 8.30% in the third quarter. Most of this increase was for loans originated in 2014, 2015 and 2016.
However, on a year-over-year basis, there was no increase in the overall FHA delinquency rate. In fact, it remains at its lowest level since 1997, Walsh says.
Walsh notes that more than 70% of the loans that were in serious delinquency in the fourth quarter were legacy loans originated in 2007 or earlier.