MBA: Delinquency Rate Rises from Previous Quarter, Foreclosures Fall

MBA: Delinquency Rate Rises from Previous Quarter, Foreclosures Fall

BY: ESTHER CHO

The national mortgage delinquency rate ticked up to 7.25 percent on a seasonally-adjusted basis in the first quarter compared to 7.09 percent in the fourth quarter of last year, the Mortgage Bankers Association (MBA) reported in its delinquency survey. While the rate increased 16 basis points from the previous quarter, it’s still 15 basis points lower compared to the rate a year ago the same quarter.

The delinquency rate includes one-to-four-unit residential properties that are at least one payment behind and excludes foreclosures.

“On a seasonally adjusted basis, the overall delinquency rate increased this quarter, driven by a slight increase in the 30-day delinquency rate. Normal seasonal patterns are beginning to re-emerge, but as has been true post-crisis, it is still difficult to parse typical seasonal swings from true changes in performance,” said Michael Fratantoni, MBA’s VP of research and economics.

“Regardless, we remain in a period of slow and uneven economic and job growth in the US and there are still many borrowers without stable, full time employment, or that are still unemployed,” he added.

On a non-seasonally adjusted basis, the delinquency rate displayed a typical decline from the fourth to first quarter and fell 76 basis points to 6.75 percent, the MBA stated.

The serious delinquency rate, which includes loans that are 90 days or more past due or in foreclosure, fell to 6.39 percent, down 39 basis points from the fourth quarter and down 105 basis points from the same year ago period.

When combining loans past due or in foreclosure, the overall rate slumped to a four-year low after falling to 10.30 percent on a non-seasonally adjusted basis. The figure represents a decrease of 95 basis points from the previous quarter and a decline of 103 basis from a year ago.

The share of loans that began the foreclosure process in Q1 remained at its record low level of 0.70 percent, which is the lowest it’s been since Q2 2007. Meanwhile, the percentage of loans in some stage of the foreclosure process averaged 3.55 percent in the Q1, the lowest level since 2008 and 84 basis points lower than the year ago rate.

The MBA also found the percentage of loans in foreclosure for judicial states averaged 5.96 percent, which is three times higher than the rate of 1.99 percent for non-judicial states.

Regardless of the gap, foreclosure inventory is still on the decline.

“Both declined to recent lows, with judicial states seeing the lowest foreclosure inventory since the fourth quarter of 2009 and nonjudicial states seeing the lowest foreclosure inventory since the fourth quarter of 2007,” Fratantoni.

According to a analysis from Capital Economics, “[t]he steady clearing of the foreclosure backlog is the result of strong demand for cheap, distressed homes from investors and cash-buyers.”

The decrease in such properties, however, may cause concern for institutional investors whose business models depend on bargains, the analytics firm explained.

 

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