Mortgage Bankers: Little Change in Delinquencies and Foreclosures during First Quarter


The latest Mortgage Bankers Association mortgage delinquency survey indicates loan delinquencies as a share of total loans outstanding ticked up slightly versus the fourth quarter of 2010. Meanwhile, the survey also revealed the share of mortgage loans in the foreclosure process edged lower nationally.

Jay Brinkman, MBA’s Chief Economist noted:

Most of these numbers continue to point to a mortgage market on the mend…Loans 90 days or more delinquent have now dropped for five straight quarters and are at their lowest level since the beginning of 2009. Foreclosure starts are at the lowest level since the end of 2008 and had the second largest drop ever.

The share of all loans past due increased from 8.25% at the end of 2010 to 8.32% during the first quarter of this year—a modest increase that can largely be attributed to an uptick in the 30-59 day delinquency bucket. While this snaps a streak of three consecutive quarter-to-quarter declines, it represents a significant improvement compared to the 10.06% delinquency rate registered during the first quarter of last year.

The share of loans in the foreclosure process dipped from 4.63% in the fourth quarter of 2010 down to 4.52% during the first three months of 2011. Although this constitutes some much-needed progress, last quarter’s reading tied the all-time high for this metric. Brinkman notes some cause for optimism here because the remaining loans originated between 2005 and 2007, which were the driving force behind the mortgage market collapse, are performing better and are now past the point where a loan typically would default.

Breaking down the data on a state-by-state basis illustrates just how much the mortgage loan crisis remains concentrated within a handful of states. Florida remains the epicenter, accounting for 24 percent of the nation’s loans that are in the foreclosure process, and 14 percent of all mortgages in the state are in foreclosure. Nevada, Florida, Arizona, Rhode Island and Georgia registered the highest rate of foreclosure starts during the first quarter.

Even though the topline numbers coming out of this report point to more challenges for certain markets going forward, some room for cautious optimism remains. Home builders will continue to see prices and new construction activity pressured over the near term by the still-large pipeline of distressed sales and tight lending standards. Nonetheless, ongoing declines in the share of seriously delinquent loans and a shrinking percentage of new foreclosure starts are good news for the housing market’s recovery.

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