Mortgage Delinquency and Foreclosures Drop

Smart foreclosures investors keep close track of important housing market indicators like delinquency rate and cash sales to help with their decision-making process in their real estate investing business. The Mortgage Bankers Association (MBA) reports that the delinquency rate for home loans on 1-4 unit residential properties have decreased to a seasonally adjusted pace of 6.04 percent at the end of Q2 2014. It marks the fifth straight quarter that the delinquency rate has fallen.
This is the lowest point since Q4 2007. The rate is also seven basis points lower than the previous quarter

Mortgage loan data

Data collected to compute the delinquency rate include loans that are a minimum of one payment past due, but does not include loans that are already in the foreclosures pipeline. At the end of Q2, the percentage of loans in the foreclosure system that had declined 2.49 percent—a 16 basis point decrease from Q1 2014 and 84 basis points lower than the same period in 2013. This foreclosures inventory rate reached its lowest point since Q1 2008.

The percentage of borrowers that entered foreclosure–received the initial Notice of Default decreased from 0.45 percent to 0.40 percent—the lowest level since Q2 2006. Loans that were 90 days or more past due (seriously delinquent) felled to 4.80 percent—24 basis point from Q1 2014 and 108 basis points lower than Q2 2013.

In the first quarter of 2014, 75 percent of seriously delinquent home mortgages were originated in 2007 or prior. Only six percent of all l seriously delinquent home mortgages were originated in 2011 or later.

Lowest level in six years

MBA’s Chief Economist Mike Fratantoni states that the delinquency and foreclosures rates declined to their lowest point since 2006. Fratanoni attributes the improved performance to a stronger job market and rising home prices. The 30-day and 60-day delinquency rates have returned to historical seasonal patterns. On an adjusted basis, the delinquency rate decreased by 24 basis points over Q1 and 108 basis points over 2013.
Overall, loan made in “recent years” perform”extremely well” because of the improved housing market and credit environment.

Regional delinquency performance data

According to Joel Kan, MBA’s Director of Economic Forecasting. A number of states that suffered the most during the housing crisis, particularly Arizona and California have seen their foreclosed homes inventory return to the levels prior to the market crash. In addition, these states recorded a foreclosure inventory rate that is less than 50 percent of the national average.

Conversely, Florida, New York and New Jersey foreclosure inventory levels are two or three times the national average. These are judicial foreclosure states that have a slower judicial process. In total, 18 states reported foreclosure rate in higher than the national average and three of them have judicial foreclosure laws. The survey also shows that more judicial states have experienced increases in the number of loans entering the pipeline compared to non-judicial states.

FHA loan delinquencies

The seriously delinquency rate foe FHA mortgages continues to improve, declining by 43 basis points over the first quarter and 135 basis points over Q2 2013.. It is the lowest level for seriously delinquent FHA loans since 2008. The delinquency rate remains higher than the historical average of four percent. The pace of foreclosure starts for FHA loans dropped nine basis points to 0.55 percent—the lowest rate since 2000 and 0.6 percent lower than the long-run average.

Leave a Reply

Your email address will not be published. Required fields are marked *


You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>