Delinquencies Rose in Fourth Quarter, Foreclosure Stats Improve
Mortgage delinquencies had their first fourth quarter uptick since 2013, the Mortgage Bankers Association (MBA) said on Wednesday. Its quarterly National Delinquency Survey put the delinquency rate, loans that are at least one payment past due but not in foreclosure, at 4.80 percent of all mortgages in the last quarter of 2016. This was an increase of 28 basis points (bps) from the third quarter level and was 3 bps higher than in the fourth quarter of 2015.
The serious delinquency rate, loans that are more than 90 days past due or in foreclosure, was 3.13 percent, up 17 basis points from the previous quarter and an increase of 31 bps from a year earlier. MBA said over 70 percent of the serious delinquencies were attributable to loans originated in 2007 and earlier."
Foreclosure starts dipped 2 bps from the prior
quarter to a rate of 0.28 percent. This
was 8 bps below the rate in the fourth quarter of 2015 and was the lowest rate
of foreclosure starts since the fourth quarter of 1988. The decrease in starts occurred
across all loan types
The foreclosure inventory, loans actively in process of foreclosure,
represented 1.53 percent of active mortgages, down 2 basis points from Q3 and
24 bps from the fourth quarter of 2015.
The foreclosure inventory rate was the lowest since the second quarter
of 2007.
Marina Walsh, MBA's Vice President of Industry Analysis, commented, "We saw a mixed set of results in the most recent survey. Mortgage delinquencies increased in the fourth quarter for the first time since 2013, while both new foreclosure starts and the percentage of loans in foreclosure continued to decline.
"The overall delinquency rate in the fourth quarter increased across all loan types - FHA, VA and conventional - as compared to the third quarter. However, it should be noted that last quarter's overall delinquency rate was at its lowest level since 2006. It is not unexpected that delinquencies could eventually increase off such a low base. We continue to see strong fundamentals in the overall economy, such as rising home values and increased employment, which bodes well for the future performance of FHA, VA and conventional loans.
Walsh said the FHA delinquency rate came off of a near 20 year low of 8.30 percent in the third quarter, rising to 9.02 percent. This was driven primarily by early delinquencies; the 30-day rate was up 55 bps over the quarter, and was led by loans originated in 2014 through 2016. However, on a year-over-year basis, there was no increase in the overall FHA delinquency rate.
The VA delinquency rate rose 11 bps from its third quarter rate, the lowest since 1979, to 4.0 percent in the fourth quarter. Year-over-year the VA rate was down 12 bps. The seasonally adjusted conventional delinquency rate increased to 4.04 percent in the fourth quarter, up 28 bps from the third quarter level and 6 bps compared to the prior a year earlier.
Walsh said, "At the state level, 47 states and DC had no change or a decrease in foreclosure starts in the fourth quarter, while 22 states saw either no change or a decrease in loans in foreclosure. New Jersey and New York continued to have the highest percentage of loans in foreclosure, at 5.42 percent and 4.28 percent, but also continued to show improvement from the previous quarter.