MORTGAGE BANKERS: Mortgage Loan Delinquency Rate Falls to 7.40% of All Loans Outstanding at End of Q3 2012

   

The delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 7.40 percent of all loans outstanding as of the end of the third quarter of 2012, a decrease of 18 basis points from the second quarter of 2012, and a decrease of 59 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey released on Thursday, Nov. 15, 2012. (A basis point equals 1/100 of a 1 percent ; 100 basis points equals 1 percent.) The non-seasonally adjusted delinquency rate increased 29 basis points to 7.64 percent this quarter from 7.35 percent last quarter. Delinquency rates typically increase between the second and third quarters of the year.


  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 on which foreclosure actions were started during the third quarter was   0.90 percent, down six basis points from last quarter and down 18 basis   points from one year ago. The percentage of loans in the foreclosure process   at the end of the third quarter was 4.07 percent, down 20 basis points from   the second quarter and 36 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 7.03 percent, a decrease of 28 basis   points from last quarter, and a decrease of 86 basis points from the third   quarter of last year.
 
  The combined percentage of loans in foreclosure or at least one payment past   due was 11.71 percent on a non-seasonally adjusted basis, a nine basis point   increase from last quarter, but a 92 basis points decrease from the same   quarter one year ago.

“Mortgage   delinquencies decreased compared to last quarter overall, driven mainly by a   decline in loans that are 90 days or more delinquent,” said Mike Fratantoni,   MBA’s Vice President of Research and Economics. “The 90 day delinquency rate   is at its lowest level since 2008, and together with the decline in the   percentage of loans in foreclosure, this indicates a significant drop in the   shadow inventory of distressed loans-a real positive for the housing market.   The 30 day delinquency rate increased slightly, but remains close to the   long-term average for this metric. Given the weak economic and job growth in   third quarter, it is not surprising that this metric has not improved. ”
 
  “The improvement in total delinquency rates was accompanied by a further drop   in the foreclosure starts rate, which hit its lowest level since 2007,

Fratantoni said. "Moreover, the foreclosure inventory rate decreased by 20 basis points over the quarter, the largest quarterly drop in the history of the survey.

The level however,   is still roughly four times the long-run average for this series as we   continue to see back logs of loans in the foreclosure process in states with   a judicial foreclosure system. The foreclosure rate for judicial states   decreased slightly to 6.6 percent and the foreclosure rate for non-judicial   states showed a steeper drop to 2.4 percent. The difference in the   foreclosure rates of the two regimes is at its widest since we started   tracking this metric in 2006. ”
 
  “If states delay initiating the foreclosure process, the 90 day delinquency   rate goes up as new foreclosures are not initiated and these loans are held   in the 90 day delinquency category. If the foreclosure process itself is   slowed, the inventory rate goes up as the foreclosure timeline is extended   and more loans are being held in foreclosure. The rate of new foreclosures   started changes when procedures change. The foreclosure rates in Maryland,   Washington and New Jersey continue to be impacted by state efforts to slow   the foreclosure process and by servicers who have to adjust their internal   foreclosure processes based on state requirements. As a result, these states   often fluctuate between large increases in foreclosure starts accompanied by   large decreases in 90 day delinquencies in a single quarter, or large   increases in 90 day delinquencies accompanied by large decreases in new   foreclosures started. This quarter, Maryland and Washington saw large   decreases in new foreclosures started after significant increases last   quarter. New Jersey led the increases in foreclosures started across every   loan type, while seeing almost equally large decreases in loans that were 90   days delinquent.”
 
  “After large second quarter increases in the foreclosure starts and inventory   rates for FHA loans due to the actions by some large servicers to re-start   foreclosure processes that had been stalled, these rates fell in the third   quarter but remain above where they were in the first quarter of 2012. The   percent of loans in foreclosure for FHA loans decreased to 4.08 percent, and   FHA foreclosure starts decreased to 1.12 percent after spiking to 1.53   percent the previous quarter. FHA loans that were 90 or more days past due   fell this quarter to the lowest levels since 2008. Despite the decreases,   these measures are still above historical averages. On the other hand, the   total past due rate for FHA loans is now at its lowest level in over 10   years, and FHA’s post-2010 books are performing much better than loans   originated prior to 2010.”
 
  “In terms of the percentage of loans in foreclosure, Florida continues to   lead the nation at 13.0 percent, more than three times the national average,   followed by New Jersey at 8.9 percent, Illinois at 6.8 percent and New York   at 6.5 percent. In contrast, California is at 2.6 percent and Arizona is at   2.5 percent, more than a full percentage point below the national average,”   Fratantoni said.
 
  Change from last quarter (second quarter of 2012)
 
  On a seasonally adjusted basis, the overall delinquency rate decreased for   all loan types except subprime ARM loans. The seasonally adjusted delinquency   rate decreased 19 basis points to 4.05 percent for prime fixed loans and   decreased 49 basis points to 8.70 percent for prime ARM loans. For subprime   loans, the delinquency rate decreased 62 basis points to 19.23 percent for   subprime fixed loans and increased 35 basis points to 22.95 percent for   subprime ARM loans. The delinquency rate for VA loans fell by 31 basis points   to 6.34 while the FHA delinquency rate declined by 75 basis points to 11.14.
 
  The percent of loans in foreclosure, also known as the foreclosure inventory   rate, decreased from last quarter to 4.07 percent. The foreclosure inventory   rate for prime fixed loans decreased eight basis points to 2.34 percent and   the rate for prime ARM loans decreased 49 basis points from last quarter to   7.82 percent. For subprime loans, the rate for subprime ARM loans decreased   182 basis points to 19.30 percent and the rate for subprime fixed loans   decreased 79 basis points to 9.36. The foreclosure inventory rate for FHA   loans decreased 15 basis points to 4.08 while the rate for VA loans decreased   seven basis points to 2.21.
 
  The non-seasonally adjusted foreclosure starts rate decreased eight basis   points for prime ARM loans to 1.47 percent, seven basis points for subprime   fixed to 1.91 percent and 41 basis points for FHA loans to 1.12 percent. The   foreclosure starts rate increased one basis point for prime fixed loans to   0.54 percent, 20 basis points for subprime ARM loans to 3.40 percent and nine   basis points for VA loans to 0.57 percent.
 
  Change from last year (third quarter of 2011)
 
  Compared with the third quarter of 2011, the foreclosure inventory rate   decreased 22 basis points for prime fixed loans, 123 basis points for prime   ARM loans, 146 basis points for subprime fixed, 343 basis points for subprime   ARM loans, four basis points for VA loans but increased 81 basis points for   FHA loans.
 
  Over the past year, the non-seasonally adjusted foreclosure starts rate   decreased 15 basis points for prime fixed loans, 69 basis points for prime   ARM loans, 59 basis points for subprime fixed, 125 basis points for subprime   ARM loans but increased 34 basis points for FHA loans and one basis point for   VA loans.

The level however, is still roughly four times the long-run average for this series as we continue to see back logs of loans in the foreclosure process in states with a judicial foreclosure system. The foreclosure rate for judicial states decreased slightly to 6.6 percent and the foreclosure rate for non-judicial states showed a steeper drop to 2.4 percent. The difference in the foreclosure rates of the two regimes is at its widest since we started tracking this metric in 2006. ” “If states delay initiating the foreclosure process, the 90 day delinquency rate goes up as new foreclosures are not initiated and these loans are held in the 90 day delinquency category.  If the foreclosure process itself is slowed, the inventory rate goes up as the foreclosure timeline is extended and more loans are being held in foreclosure. The rate of new foreclosures started changes when procedures change. The foreclosure rates in Maryland, Washington and New Jersey continue to be impacted by state efforts to slow the foreclosure process and by servicers who have to adjust their internal foreclosure processes based on state requirements. As a result, these states often fluctuate between large increases in foreclosure starts accompanied by large decreases in 90 day delinquencies in a single quarter, or large increases in 90 day delinquencies accompanied by large decreases in new foreclosures started. This quarter, Maryland and Washington saw large decreases in new foreclosures started after significant increases last quarter. New Jersey led the increases in foreclosures started across every loan type, while seeing almost equally large decreases in loans that were 90 days delinquent.” “After large second quarter increases in the foreclosure starts and inventory rates for FHA loans due to the actions by some large servicers to re-start foreclosure processes that had been stalled, these rates fell in the third quarter but remain above where they were in the first quarter of 2012.  The percent of loans in foreclosure for FHA loans decreased to 4.08 percent, and FHA foreclosure starts decreased to 1.12 percent after spiking to 1.53 percent the previous quarter. FHA loans that were 90 or more days past due fell this quarter to the lowest levels since 2008. Despite the decreases, these measures are still above historical averages. On the other hand, the total past due rate for FHA loans is now at its lowest level in over 10 years, and FHA’s post-2010 books are performing much better than loans originated prior to 2010.” “In terms of the percentage of loans in foreclosure, Florida continues to lead the nation at 13.0 percent, more than three times the national average, followed by New Jersey at 8.9 percent, Illinois at 6.8 percent and New York at 6.5 percent.  In contrast, California is at 2.6 percent and Arizona is at 2.5 percent, more than a full percentage point below the national average,” Fratantoni said. Change from last quarter (second quarter of 2012) On a seasonally adjusted basis, the overall delinquency rate decreased for all loan types except subprime ARM loans. The seasonally adjusted delinquency rate decreased 19 basis points to 4.05 percent for prime fixed loans and decreased 49 basis points to 8.70 percent for prime ARM loans. For subprime loans, the delinquency rate decreased 62 basis points to 19.23 percent for subprime fixed loans and increased 35 basis points to 22.95 percent for subprime ARM loans. The delinquency rate for VA loans fell by 31 basis points to 6.34 while the FHA delinquency rate declined by 75 basis points to 11.14. The percent of loans in foreclosure, also known as the foreclosure inventory rate, decreased from last quarter to 4.07 percent. The foreclosure inventory rate for prime fixed loans decreased eight basis points to 2.34 percent and the rate for prime ARM loans decreased 49 basis points from last quarter to 7.82 percent. For subprime loans, the rate for subprime ARM loans decreased 182 basis points to 19.30 percent and the rate for subprime fixed loans decreased 79 basis points to 9.36.  The foreclosure inventory rate for FHA loans decreased 15 basis points to 4.08 while the rate for VA loans decreased seven basis points to 2.21. The non-seasonally adjusted foreclosure starts rate decreased eight basis points for prime ARM loans to 1.47 percent, seven basis points for subprime fixed to 1.91 percent and 41 basis points for FHA loans to 1.12 percent. The foreclosure starts rate increased one basis point for prime fixed loans to 0.54 percent, 20 basis points for subprime ARM loans to 3.40 percent and nine basis points for VA loans to 0.57 percent. Change from last year (third quarter of 2011) Compared with the third quarter of 2011, the foreclosure inventory rate decreased 22 basis points for prime fixed loans, 123 basis points for prime ARM loans, 146 basis points for subprime fixed, 343 basis points for subprime ARM loans, four basis points for VA loans but increased 81 basis points for FHA loans. Over the past year, the non-seasonally adjusted foreclosure starts rate decreased 15 basis points for prime fixed loans, 69 basis points for prime ARM loans, 59 basis points for subprime fixed, 125 basis points for subprime ARM loans but increased 34 basis points for FHA loans and one basis point for VA loans.

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