MBA: Mortgage Delinquency Rate Continued To Fall In Q1

The mortgage delinquency rate (30 days or more past due) as of the end of the first quarter stood at about 4.71%, down nine basis points compared with the previous quarter and down six basis points compared with the first quarter of 2016, according to the latest data gathered by the Mortgage Bankers Association (MBA).

The decrease was driven by a decline in delinquencies for Federal Housing Administration (FHA) and Veterans Affairs (VA) loans; the delinquency rate for conventional loans was flat compared with the fourth quarter, according to the MBA’s National Delinquency Survey.

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

The percentage of loans in the foreclosure process was 1.39%, down 14 basis points from the fourth quarter and down 35 basis points compared with one year ago.

The serious delinquency rate (90 days or more past due or in the process of foreclosure) was 2.76%, a decrease of 37 basis points compared with the fourth quarter and a decrease of 53 basis points from last year.

“Employment growth started 2017 on strong footing, with the economy adding 216,000 jobs in January 2017 and 232,000 jobs in February,” says Marina Walsh, vice president of industry analysis for the MBA, in a statement. “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.”

As Walsh points out, mortgage delinquencies typically increase in the late fourth quarter and early first quarter of any given year, usually due to higher heating costs and holiday spending. However, this is usually reversed by the end of the first quarter.

“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,” she says.

Walsh also notes that the slight quarter-over-quarter increase in foreclosure starts was the first 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,” she says. “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,” Walsh adds. “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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