The delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 7.4% of all loans outstanding as of the end of the third quarter, a decrease of 18 basis points (bps) from the second quarter and a decrease of 59 bps from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 29 bps points to 7.64% in the third quarter, from 7.35% in the second quarter.
The percentage of loans on which foreclosure actions were started during the third quarter was 0.90%, down 6 bps from previous quarter and down 18 bps from one year ago. The percentage of loans in the foreclosure process at the end of the third quarter was 4.07%, down 20 bps from the second quarter and 36 bps 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%, a decrease of 28 bps from last quarter and a decrease of 86 bps from the third quarter of last year.
The combined percentage of loans in foreclosure or at least one payment past due was 11.71% on a non-seasonally adjusted basis, a 9 bps increase from last quarter, but a 92 bps 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,’ says 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.’