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Delinquencies Decline in Latest MBA Mortgage Delinquency Survey

Washington, DC – (RealEstateRama) — The delinquency rate for mortgage loans on one- to four-unit residential properties decreased to a seasonally adjusted rate of 4.71 percent of all loans outstanding at the end of the first quarter of 2017.  The delinquency rate was down nine basis points from the previous quarter, and was six basis points lower than one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.

The percentage of loans on which foreclosure actions were started during the first quarter was 0.30 percent, an increase of two basis points from the previous quarter, but five basis points lower than one year ago.

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 first quarter was 1.39 percent, down 14 basis points from the fourth quarter and 35 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 2.76 percent, a decrease of 37 basis points from last quarter, and a decrease of 53 basis points from last year.

Marina Walsh, MBA’s Vice President of Industry Analysis, offered the following commentary on the survey:

“Mortgage delinquencies decreased overall in the first quarter of 2017, driven by a drop in both the FHA and VA delinquency rates from the previous quarter as the conventional delinquency rate held constant.  Employment growth started 2017 on strong footing, with the economy adding 216,000 jobs in January 2017 and 232,000 jobs in February. Average hourly wage growth increased 2.8 percent over the year, and has maintained a generally increasing trend since late 2015. These fundamentals have helped to support the performance of all loan types – whether FHA, VA or conventional loans.

“Last quarter’s increase in FHA delinquencies was reversed in the first quarter of 2017. The seasonally-adjusted FHA delinquency rate decreased to 8.09 percent from 9.02 percent in the fourth quarter, reaching its lowest level since 1997. Typically, in the fourth quarter of any given year, we see a rise in delinquencies because of higher heating costs and holiday spending.  This increase is usually reversed in the first quarter. While MBA uses a seasonal adjustment model to mitigate these predictable seasonal effects, this particular 6 month period showed larger than expected swings.  First quarter results indicate that the increase in FHA delinquencies that we saw in the last quarter of 2016 has not been established as an ongoing trend.

“Additionally, the VA delinquency rate dropped to 3.90 percent from 4.00 percent in the fourth quarter.  The conventional delinquency rate held steady at 4.04 percent.

“We saw an increase in foreclosure starts for the first time since the fourth quarter of 2014, but this increase was accompanied by a sizable drop in loans that were 90 days or more past due. It is likely that legacy distressed loans were held in the late stage-delinquency bucket by factors such as resolution attempts and state-specific requirements, before eventually going into foreclosure status. All 50 states and the District of Columbia saw a decrease in the 90-day or more delinquency rate.

“In addition, nearly all states had a decrease in the percentage of loans in foreclosure in the first quarter.  The overall percentage of loans in the process of foreclosure was 1.39 percent, its lowest level since the first quarter of 2007. While judicial states still had more than three times the percent of loans in foreclosure as non-judicial states, that measure declined to the lowest level since the fourth quarter of 2007.”

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© 2017 Mortgage Bankers Association (MBA).  All rights reserved, except as explicitly granted.

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.

Ali Ahmad

(202) 557- 2727