Mortgage Delinquencies Down in 2nd Quarter of 2018

Ali Ahmad
(202) 557- 2727

WASHINGTON, D.C. (August 16, 2018) - The delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 4.36 percent of all loans outstanding at the end of the second quarter of 2018. 

The delinquency rate was down 27 basis points from the previous quarter, but was up 12 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The percentage of loans on which foreclosure actions were started dropped four basis points from the last quarter to 0.24 percent, its lowest level since the second quarter of 1987.  

"We continue to see improvement in the overall mortgage delinquency rate as the impact of the hurricanes from one year ago lessens, particularly for conventional loans," according to Marina Walsh, Vice President of Industry Analysis at MBA. "Among the various loan types, the delinquency rate for conventional loans was two basis points lower than one year ago, prior to the hurricanes.  While delinquencies for both FHA and VA loans were up from one year ago, they were improved over the previous quarter."

"The economic outlook continues to support good loan performance.  Gross domestic product grew at a 4.1 percent rate, the unemployment rate was at an 18-year low, and job growth is averaging over 210,000 jobs per month, so far this year.   This means the economy is close to full employment."  

"But even with positive economic news, we continue to monitor factors that may contribute to a rise in delinquencies in future quarters.  Like past natural disasters, the wildfires in California may have a negative impact. Other factors include the aging of servicing portfolios as mortgage refinances slow, and the changing credit quality among certain loan types."

Key findings of MBA's Quarterly National Delinquency Survey include:

  • Mortgage delinquencies dropped across all stages of delinquency in the second quarter of 2018 compared to the first quarter of 2018.  The 30-day delinquency rate dropped two basis points from the previous quarter, while the 60-day and 90-day delinquency buckets dropped by eight and 18 basis points respectively.
  • The delinquency rate for conventional loans decreased 33 basis points over the previous quarter to 3.45 percent.  The FHA delinquency rate fell by 32 basis points to 8.70 percent and VA delinquency rate fell by 35 basis points to 3.97 percent over the previous quarter.
  • On a year-over-year basis, the delinquency rate for conventional loans dropped by two basis points, while the FHA delinquency rate increased by 76 basis points and the VA delinquency rate increased by 25 basis points.
  • 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 1.05 percent, down 11 basis points from the first quarter of 2018 and 24 basis points lower than one year ago. This was the lowest foreclosure inventory rate since the third quarter of 2006.
  • The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 2.30 percent in the second quarter of 2018, a decrease of 31 basis points from last quarter, and a decrease of 19 basis points from last year.
  • Both Texas and Florida continue to recover from the September 2017 hurricanes.  The non-seasonally-adjusted overall mortgage delinquency rate in Texas dropped by 26 basis points to 5.36 percent in the second quarter. Prior to the hurricane one year ago, the overall delinquency rate for Texas was 5.05 percent. In Florida, the non-seasonally-adjusted overall mortgage delinquency rate on all loans dropped 139 basis points to 5.20 percent in the second quarter.  Prior to the hurricane one year ago, the overall delinquency rate for Florida was 4.07 percent.
  • The recovery process for FHA borrowers in Texas and Florida is improving at a slower pace. The FHA non-seasonally-adjusted mortgage delinquency rate in Texas was 10.53 percent in the second quarter, compared to 9.56 percent one year ago. In Florida, the non-seasonally-adjusted FHA mortgage delinquency rate was 9.01 percent, compared to 6.16 percent one year ago.
  • Please note: while forbearance is in place for many borrowers affected by these storms, MBA's survey asks servicers to report these loans as delinquent if the payment was not made based on the original terms of the mortgage regardless of any forbearance plans in place.

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Data are from a proprietary paid subscription service of MBA and are provided to the media as a courtesy, solely for use as background reference. No part of the data may be reproduced, stored in a retrieval system, transmitted or redistributed in any form or by any means, including electronic, mechanical, photocopying, recording or otherwise.  Permission is granted to news media to reproduce limited data in text articles. Data may not be reproduced in tabular or graphical form without MBA's prior written consent.

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 38 million loans on one- to four- unit residential properties. Loans surveyed were reported by over 100 lenders, including mortgage bank, commercial banks, and thrifts.