Mortgage Delinquencies and Foreclosures Continue to Drop in Second Quarter
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WASHINGTON, D.C. (August 13, 2015) - The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 5.30 percent of all loans outstanding at the end of the second quarter of 2015. This was the lowest level since the second quarter of 2007. The delinquency rate decreased 24 basis points from the previous quarter, and 74 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey.
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 second quarter was 2.09 percent, down 13 basis points from the first quarter and 40 basis points lower than the same quarter one year ago. This was the lowest foreclosure inventory rate since the fourth quarter of 2007.
The percentage of loans on which foreclosure actions were started during the second quarter was 0.40 percent, a decrease of five basis points from the previous quarter. The foreclosure starts rate was unchanged relative to the second quarter of 2014.
The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 3.95 percent, a decrease of 29 basis points from the previous quarter, and a decrease of 85 basis points from the second quarter of 2014. This was the lowest level since the fourth quarter of 2007.
Marina Walsh, MBA's Vice President of Industry Analysis, offered the following commentary on the survey:
"Overall delinquency rates and the percentage of loans in foreclosure continued to fall in the second quarter and are at their lowest levels since 2007. Even more telling, nearly every state in the nation reported declining foreclosure inventory rates over the second quarter, reflecting a nationwide housing market recovery and strong job market that provide opportunities for distressed loans to be resolved rather than be put into foreclosure.
"The overall delinquency rate for FHA loans dropped to 9.01 percent in the second quarter from 9.10 percent, as the 90 day or more delinquent category declined. However, the 30-day and 60-day delinquency rate was up by a combined 10 basis points from the previous quarter. In addition, the FHA foreclosure inventory rate rose to 2.68 percent in the second quarter, four basis points higher than the previous quarter but still 13 basis points lower than a year ago. As more recent loan vintages begin to age and as older vintages enter the foreclosure process, we may see volatility in FHA delinquency and foreclosure rates.
"While only 40 percent of loans serviced are in judicial states, these states account for a growing majority of loans in foreclosure. For states where the judicial process is more frequently used, 3.41 percent of loans serviced were in the foreclosure process, compared to 1.15 percent in non-judicial states. States that utilize both judicial and non-judicial foreclosure processes had a foreclosure inventory rate closer that of the non-judicial states at 1.36 percent.
"As has been the case since the fourth quarter of 2012, New Jersey, New York, and Florida had the highest percentage of loans in foreclosure in the nation. Despite a 36 basis point decline in foreclosure inventory over the first quarter, New Jersey's foreclosure inventory rate was still 7.31 percent, while New York, which had a 20 basis point decline over the first quarter had the second highest foreclosure inventory rate at 5.31 percent. Both states primarily use a judicial foreclosure process.
"While the judicial foreclosure process has contributed to higher foreclosure inventory in Florida compared to states with a non-judicial process, Florida's foreclosure inventory rate dropped to 4.24 percent, a 58 basis point decline from the previous quarter, the largest decline experienced by any state in the quarter.
"Legacy loans continued to account for the majority of all troubled mortgages. 73 percent of the loans that were seriously delinquent, either more than 90 days delinquent or in the foreclosure process were originated before 2008, even as the overall rate of serious delinquencies for those cohorts decreased."
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The above data were obtained in cooperation with the Mortgage Bankers Association (MBA), which produces the National Delinquency Survey (NDS). The NDS, which has been conducted since 1953, covers 40 million loans on one- to four- unit residential properties, representing approximately 88 percent of all "first-lien" residential mortgage loans outstanding in the United States. Loans surveyed were reported by over 100 lenders, including mortgage bank, commercial banks, and thrifts.