The Mortgage Bankers Association’s (MBA) recently released National Delinquency Survey (NDS) provides seasonally adjusted rates of delinquency on all existing mortgages in the one- to four-unit first-lien residential mortgage market through the third quarter of 2020. The NDS breaks down delinquencies into various buckets: mortgages 30-59 days past due, 60-89 days past due, and 90 or more days past due. Additionally, it provides foreclosure inventory at the end of the quarter as well as those started during the quarter. For the purposes of the survey, MBA asks servicers to report loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage.
The latest survey shows that the percentage of loans in all past due categories decreased in the third quarter from Q2 2020, except for the 90 days or more past due category. Furthermore, this “seriously delinquent” rate (SDR), i.e., rates of occurrence of loans that were 90 or more days delinquent or in the process of foreclosure increased across most of the nation. With forbearance plans still active and foreclosure moratoriums in place until at least the end of the year, many borrowers experiencing longer-term distress will remain in this delinquency category until plans for reducing loss are available. An estimated 3.4 million homeowners were in forbearance plans as of September 27, 2020.
The national delinquency rate was down 57 basis points from the second quarter of 2020 and up 368 basis points from one year ago. The decrease in the mortgage delinquency rate was driven by a sharp decline in newer 30-day delinquencies and 60-day delinquencies. As an encouraging sign of housing recovery, the 30-day delinquency rate reached its lowest level since the survey’s inception in 1979.
Some of the highest state-level SDRs in recent history were seen in quarters during and immediately following the Great Recession. The second and third quarters of 2020 marked a return to such elevated levels of serious delinquency. All states had experienced increases in the third quarter in their SDRs from the previous quarter. Puerto Rico was the only area in the United States in the survey that had reported a reduction in its SDR. The below figure shows the seriously delinquent rates of each Census Division in the U.S.
Nationally, the seriously delinquent rate was 5.16 percent, the highest rate since the fourth quarter of 2013. It increased 90 basis points from last quarter and increased by 335 basis points from last year. As MBA’s survey also provides statewide breakdowns of the total number of loans serviced, including those which are current, further analysis shows that absolute numbers of seriously delinquent loans increased across all states.
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