MBA: Delinquency Rates Down, Some to Pre-Recession Levels
There was a lot of good news in the Fourth Quarter NationalrnDelinquency Study released by the Mortgage Bankers Association (MBA)rnThursday. First, the overall, seasonallyrnadjusted delinquency rate (which does not include loans in foreclosure) fell torn8.22 percent, a decrease of 91 basis points from a 9.13 percent rate in thernthird quarter and down 125 basis points from the same period in 2009. Jay Brinkmann, MBAs chief economist said thatrnthe non-seasonally adjusted rate showing a decrease of 46 basis points to 8.93rnpercent might be even better news. There is usually a sharp spike in the raternin the fourth quarter, perhaps because homeowner’s budgets are impacted by thernfirst home heating bills of the season. rnThat the rate fell this time indicates that the downward movement may bernreal.</p
Delinquencies were down across all stages but one. Loans in the 30+ day bucket had a delinquencyrnrate of 3.25 percent, down from 3.36 percent in the third quarter and 3.31rnpercent a year earlier. This rate, in fact,rnreturns 30 day delinquencies to a pre-recession level. Loans delinquent 60+ days decreased 1.44rnpercent in the third quarter to 1.34 percent. rnThe rate was 1.60 percent a year earlier. Loans in the 90+ bucket decreased from 4.34rnpercent to 3.63 percent quarter-over-quarter. rnOne year earlier the 90+ rate was 4.62 percent. Loans seriously delinquent or in foreclosurernhad a rate of 8.57 percent compared to 8.70 percent a quarter earlier and 9.67rnpercent in the fourth quarter of 2009.</p
Foreclosure starts were down from 1.34 percent in the thirdrnquarter to 1.27 percent, but the new figures were seven basis points higherrnthan a year earlier. The foreclosurerninventory was up from 4.58 percent in Q4 2009 and 4.39 percent in Q3 2010 torn4.63 percent in the most recent survey. rnBrinkmann said much of the increase is probably due to process issuesrnwith loans working through the system.</p
The improvement in delinquencies holds across loan types asrnwell, with the rate for all prime loans and all subprime loans decreasing forrnthe third consecutive quarter. Primernloans now have a delinquency rate of 5.48 percent, down from 6.29 percent in Q3rnand subprime are at 23.01, a decrease of 322 basis points. There were slight increases in foreclosurernstarts for subprime and VA loans and Prime ARMs. </p
One area that bears watching, Brinkmann said, was FHArnloans. While seasonally adjusted figuresrnin all categories except foreclosure inventory, unadjusted figures showed anrnupward blip in early delinquencies. Brinkmann said, since FHA has grown by onernmillion loans in the last year, an increase in percentages was surprising. </p
Among the states, Mississippi had the highest overallrndelinquency rate at 13.30 percent followed by Nevada (12 percent), and Georgiarn(11.89 percent). Florida had the highestrnforeclosure inventory (14.18 percent) with Nevada second at 10.06 percent andrnNew Jersey third at 7.23 percent. Thernhighest foreclosure starts were in Nevada (2.95 percent,) Arizona (2.29rnpercent), and Florida (2.21 percent.) rnBrinkmann said that one-quarter of homes in Florida are currently in a foreclosurerninventory or the process of foreclosure. </p
This is the 41st year that MBA has conducted the delinquencyrnsurvey and the 156th consecutive quarter. Data was collected on 43.6 million mortgage loans,rn389,000 fewer than in the third quarter. rnThe decrease, Brinkmann said, was due to a combination of foreclosures,rna high level of refinances that had not yet reentered the system, and thernadvent of non-traditional servicers such as IBM which were not yet participatingrnin the survey.</p
At a press conference following the release a reporter askedrnhow many more positive quarters would be needed to return the data to normalrnlevels. Brinkmann said the situation isrnso localized it is impossible to say on a national basis. The pattern so far, however, has correlatedrnwith employment data so he expects that delinquencies will continue to followrnthe job market. Another factor that isrnpositive, however, is that tightened underwriting requirements have been inrneffect for a while and the first of those new loans have passed the three-yearrnmark before which most problems tend to occur, so that cohort of the data base appearsrnto be aging well.</p
He was also questioned whether the improvement inrndelinquencies might be a factor of loan modifications which have a historicallyrnhad a high redefault rate and thus the data might reflect only a pause in newrndelinquencies. Brinkmann said that againrnthe historical timing of the modifications means that many redefaults have eitherrnoccurred or are currently reflected in the data.
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