The delinquency rate for mortgage loans on one- to four-unit residential properties decreased to a seasonally adjusted rate of 7.58% of all loans outstanding as of the end of the fourth quarter of 2011, a decrease of 41 basis points (bps) from the third quarter and a decrease of 67 bps from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased 5 bps to 8.15% this quarter from 8.2% last quarter.
The percentage of loans on which foreclosure actions were started during the third quarter was 0.99%, down 9 bps from last quarter and down 28 bps from 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 fourth quarter was 4.38%, down 5 bps from the third quarter and 26 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 7.73%, a decrease of 16 bps from last quarter and a decrease of 87 bps from the fourth quarter of last year.
The combined percentage of loans in foreclosure or at least one payment past due was 12.63% on a non-seasonally adjusted basis, a 10 bps decrease from last quarter and 107 bps lower than a year ago.
‘Mortgage performance continued to improve in the fourth quarter, reflecting the improvement we saw in the job market and broader economy,’ says Jay Brinkmann, MBA's chief economist and senior vice president for research and education. ‘The total delinquency rate and foreclosure starts rate decreased and are back down to levels from three years ago. A major reason is that the loans that are seriously delinquent are predominantly made up of loans originated prior to 2008 and this pool is steadily growing smaller as a percent of total loans outstanding.
‘In addition,’ Brinkmann adds, ’employment is the key driver of mortgage performance and the mortgage delinquency rate is actually falling faster than the unemployment rate is declining.’