MBA Reports Small Declines in Mortgage Delinquencies

The Mortgage Bankers Association today released National Delinquency Survey statistics for the third quarter of 2010.  The delinquency rate – loans that are not in foreclosure with at least one payment late – fell from a seasonally-adjusted rate of 9.85% in the second quarter of 2010 to 9.13% in the third quarter. The 9.13% rate represents a decrease of 51 basis points from a year ago.

The foreclosure rate was at a rate of 4.39%, which is still near record highs.  In contrast, for the second quarter of 2006, the rate was 0.99%.

The combined delinquent and foreclosure rate for loans equaled 13.78%, a 19 basis point decline from the second quarter of 2010.

MBA attributes the small improvements to marginal gains in the labor market, but noted that with continued, high rates of unemployment they expect only small declines in the delinquency rate in the future.  Michael Fratantoni, MBA’s Vice President of Research and Economics, stated:

Mortgage delinquency rates declined over the quarter and over the past year, due primarily to a large decline in the 90+ day delinquency rate.  The number of loans in foreclosure also dropped, bringing the serious delinquency rate to its lowest level since the second quarter of 2009.  However, the foreclosure starts rate increased for all loan types and the foreclosure starts rate for prime fixed loans set a new record high in the survey, as more loans entered the foreclosure process.

Relative to the third quarter of 2009, there were declines in the delinquency rates for fixed loans types: 40 basis points for prime fixed loans, 64 basis point for subprime fixed loans, 182 basis points for FHA loans and 65 basis points for VA loans.  However, year-over-year, there were increases in the delinquency rates for adjustable rate loans: 91 basis points for prime ARM loans and 131 basis points for subprime ARM loans.

The data continue to reveal that foreclosures are heavily concentrated with respect to geographic scope. Florida and Nevada continue to rank first in terms of rates of foreclosure starts and loans in the foreclosure process. In fact, since home prices declines began at the end of 2006, 39% of the 7.2 million foreclosures have been in California, Nevada, Florida, and Arizona.



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