The seasonally adjusted mortgage delinquency rate declined 31 basis points during the fourth quarter of 2012, sliding to 7.09%–its lowest point in more than four years. Each of the three delinquency buckets (30, 60, 90+ days past due) registered a lower seasonally adjusted delinquency rate compared to the third quarter of 2012, but mortgages just 30 days overdue experienced the largest decline with a 21 basis point drop to 3.04%. Non-seasonally adjusted 90+ day delinquencies did rise for the first time in more than a year and could lead to a rise in foreclosure activity over the short term, but as of the fourth quarter of 2012 the total foreclosure inventory rate is at its lowest reading (3.74%) since the end of 2008.
Foreclosure starts plunged to a share of 0.7% of all first-lien mortgages to close out 2012. Not only is this the lowest reading since the first half of 2007, it also marked the largest quarter-to-quarter decline in the foreclosure starts rate ever recorded for the MBA’s survey. A total of 44 states saw the foreclosure starts rate fall or remain unchanged versus the third quarter of 2012 and only three have a foreclosure starts rate at or above the reading from the fourth quarter of 2011.
As has been the case since foreclosures started spiking, overall foreclosure activity remains highly concentrated from a geographic perspective. Indeed, the top 5 states accounted for just above 52% of all loans in foreclosure during the fourth quarter of 2012, with Florida representing 23.7% of the nation’s overall inventory; however, these same five states (Florida, New York, California, New Jersey and Illinois) accounted for less than a third of all serviced loans. In terms of foreclosures started during the fourth quarter, Florida posted the highest among the states (1.34%), followed by Nevada (1.18%). New Jersey’s foreclosure starts rate declined more than 1.2 percentage points between the third and fourth quarters thanks to the diminishing effects of previous legislative efforts imposed to delay the foreclosure process.