The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 7.40 percent of all loans outstanding as of the end of the first quarter of 2012, a decrease of 18 basis points from the fourth quarter of 2011, and a decrease of 92 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased 121 basis points to 6.94 percent this quarter from 8.15 percent last quarter.
The percentage of loans on which foreclosure actions were started during the fourth quarter was 0.96 percent, down three basis points from last quarter and down 12 basis points from one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the first quarter was 4.39 percent, up one basis point from the fourth quarter and 13 basis points lower than one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 7.44 percent, a decrease of 29 basis points from last quarter, and a decrease of 66 basis points from the first quarter of last year.
The combined percentage of loans in foreclosure or at least one payment past due was 11.33 percent on a non-seasonally adjusted basis, a 120 basis point decrease from last quarter and was 98 basis points lower than a year ago. This was the lowest that this measure has been since 2008.
“Mortgage delinquencies normally fall during the first quarter of the year, but the declines we saw were even greater than the normal seasonal adjustments would predict, so delinquencies are clearly continuing to improve. Newer delinquencies, loans one payment past due as of March 31, are down to the lowest level since the middle of 2007, indicating fewer new problems we will need to deal with in the future. The percentage of loans three payments or more past due, the loans that represent the backlog of problems that still need to be handled, is down to the lowest level since the end of 2008. Foreclosure starts are at their lowest level since the end of 2007,” said Michael Fratantoni, MBA's Vice President of Research and Economics.
“The improvement in loan performance was widespread: only four states (Maryland, Delaware, New Jersey and Washington) experienced increases in their 90+ day delinquency rates. Forty one states had decreases in foreclosure starts and 22 states had decreases in the percentage of loans in foreclosure.
“Nationally, the percentage of loans in the process of foreclosure is up slightly, but that top-line figure covers up several important underlying trends. First, the percentage of loans in foreclosure is up for prime and FHA loans. The percentage of subprime loans in foreclosure continues to fall as the subprime loans age and the problem loans are resolved one way or the other. However, the percentages of loans in foreclosure for both FHA loans and prime fixed-rate loans are climbing and are just below all-time records.
“The problem continues to be the slow-moving judicial foreclosure systems in some of the largest states. While the rate of foreclosure starts is essentially the same in judicial and non-judicial foreclosure states, the percent of loans in the foreclosure process has reached another all-time high in the judicial states, 6.9 percent. In contrast, that rate has fallen to 2.8 percent in non-judicial states, the lowest since early 2009. As the foreclosure starts rate is essentially the same in both groups of states, that difference is due entirely to the systems some states have in place that effectively block timely resolution of non-performing loans and is not an indicator of the fundamental health of the housing market or the economy. In fact, hard-hit markets like Arizona that have moved through their foreclosure backlog quickly are seeing home price gains this spring.
“We are seeing a similar pattern emerge for FHA loans due to the different state laws increasing risk and cost to FHA. As with other types of loans, while the rate of foreclosures started is essentially the same for FHA loans in judicial and non-judicial states, the percentage of loans in foreclosure is 5.6 percent in judicial states and only 2.7 percent in non-judicial states. Since FHA standards are the same in every state, the different legal regimes are driving this differential in foreclosure rates. Since the losses in a foreclosure increase considerably the longer a loan remains in foreclosure, the higher costs being imposed on FHA by the legal delays in a handful of states are being passed on to all FHA borrowers in the form of higher across-the-board increases in insurance premiums, and ultimately to the taxpayers if the FHA insurance fund were to develop a shortage.
“Finally, loans originated at the peak of the housing boom and, arguably at the low point in credit standards, continue to comprise the majority of the problem loans. Sixty percent of all loans that were three payments or more past due or in foreclosure were originated between 2005 and 2007.”
Change from last quarter (fourth quarter of 2011)
On a seasonally adjusted basis, the overall delinquency rate decreased for all loan types except VA loans. The seasonally adjusted delinquency rate decreased five basis points to 4.07 percent for prime fixed loans and decreased 17 basis points to 9.05 percent for prime ARM loans. The delinquency rate decreased 34 basis points to 19.33 percent for subprime fixed loans and decreased 24 basis points to 22.16 percent for subprime ARM loans. FHA loans also saw a decline, with the delinquency rate decreasing 36 basis points to 12.00, while the delinquency rate for VA loans increased two basis points to 6.57.
The percent of loans in foreclosure, also known as the foreclosure inventory rate, increased overall from last quarter to 4.39 percent. Broken down, the foreclosure inventory rate for prime fixed loans increased seven basis points to 2.59 percent and the rate for prime ARM loans increased four basis points from last quarter to 8.76 percent. The rate for subprime ARM loans decreased 62 basis points to 21.55 percent and the rate for subprime fixed loans decreased 17 basis points to 10.48. The foreclosure inventory rate for FHA loans increased 29 basis points to 3.83 while the rate for VA loans increased nine basis points to 2.46.
The non-seasonally adjusted foreclosure starts rate remained unchanged for prime fixed loans at 0.62 percent, decreased eight basis points for prime ARM loans to 1.75 percent, decreased 20 basis points for subprime fixed to 2.13 percent and 57 basis points for subprime ARMs to 3.22 percent. The foreclosure starts rate increased eight basis points for FHA loans to 0.96 percent and five basis points for VA loans to 0.65 percent.
Change from last year (first quarter of 2011)
Given the challenges in interpreting the true seasonal effects in these data when comparing quarter to quarter changes, it is important to highlight the year over year changes of the non-seasonally adjusted results.
Compared with the first quarter of 2011, the foreclosure inventory rate: decreased 77 basis points for prime ARM loans, remained unchanged prime fixed loans, decreased five basis points for subprime fixed, decreased 71 basis points for subprime ARM loans, increased 48 basis points for FHA loans and increased seven basis points for VA loans.
Over the past year, the non-seasonally adjusted foreclosure starts rate: decreased six basis points for prime fixed loans, decreased 21 basis points for prime ARM loans, decreased 43 basis points for subprime fixed, decreased 45 basis points for subprime ARM loans, increased three basis points for FHA loans and decreased eight basis points for VA loans.