Delinquencies increase, foreclosure starts flat in latest MBA National Delinquency SurveyMortgagePress.comMBA, delinquency rate, MBA National Delinquency Survey, VA foreclosure, Jay Brinkmann
The delinquency rate for mortgage loans on one- to-four-unit
residential properties stood at 6.99 percent of all loans
outstanding at the end of the third quarter of 2008, up 58 basis
points from the second quarter of 2008, and up 140 basis points
from one year ago on a seasonally adjusted basis, according to the
Mortgage Bankers Association's National Delinquency Survey.
Top line results
The delinquency rate includes loans that are at least one payment
past due but does not include loans somewhere in the process of
foreclosure. The percentage of loans in the foreclosure process at
the end of the third quarter was 2.97 percent, an increase of 22
basis points from the second quarter of 2008 and 128 basis points
from one year ago. The percentage of loans in the process of
foreclosure set a new record this quarter.
The percentage of loans on which foreclosure actions were
started during the third quarter was 1.07 percent, down one basis
point from last quarter and up 29 basis points from one year ago on
a non-seasonally adjusted basis.
The seasonally adjusted total delinquency rate continues to be
the highest recorded in the MBA survey. The increase in the overall
delinquency rate was driven by increases in the number of loans 90
or more days past due, primarily in California and Florida. The 30
day delinquency percentage remains below levels seen as recently as
The foreclosure starts rate differed greatly by loan type. For
prime loans, foreclosure starts on fixed rate loans were 0.34
percent, unchanged from last quarter, while prime ARM foreclosure
starts fell five basis points to 1.77 percent. For subprime loans,
fixed rate foreclosure starts increased 16 basis points to 2.23
percent and subprime ARM foreclosure starts decreased 16 basis
points to 6.47 percent. FHA foreclosure starts were unchanged at
0.95 percent and VA foreclosure starts increased two basis points
to 0.59 percent, all on a non-seasonally adjusted basis.
Nine states had rates of foreclosure starts that were above the
national average: Nevada, Florida, Arizona, California, Michigan,
Rhode Island, Illinois, Indiana, and Ohio. The remaining 41 states
plus the District of Columbia were below the national average.
Job losses to drive mortgage
Jay Brinkmann, MBA's chief economist and senior vice president of
research and economics said, "An initial look at the number of
foreclosure starts would seem to indicate at least a leveling off
of foreclosures. These numbers, however, are being influenced by
several factors including various moratoria on foreclosure filings
and by mortgage companies holding loans in the 90+ day bucket
during the modification and workout process. Evidence of this can
be seen in the large increase in loans 90 days or more past due but
not yet in foreclosure. This rate jumped by 45 basis points, the
highest increase in this category ever recorded in the MBA survey
and far above the average 4 basis point jump we would expect to
see. While 20 states showed declines in the rate of foreclosure
starts between the second and third quarters, every state showed an
increase in the 90 days or more delinquent category with the
exception of Alaska and all of the increases were greater than what
we would expect due to normal seasonal factors."
"As for what is driving the national numbers, it is still a case
of product and location. Prime and subprime ARMs continue to have
the highest share of foreclosures and California and Florida have
about 54 percent and 41 percent of the prime and subprime ARM
foreclosure starts respectively. Until those two markets turn
around, they will continue to drive the national numbers,"
"While much of the mortgage problem in some states continues to
be overbuilding, poor underwriting and incorrect credit pricing,
fundamental economic factors are becoming more important. The
30-day delinquency rate is still lower than it was in the 2001
recession, but job losses are mounting. We have not gone into past
recessions with the housing market as weak as it is now so it is
likely that a much higher percentage of delinquencies caused by job
losses will go to foreclosure than we have seen in the past.
"Until recently, it was job and population losses that were the
problems in states like Michigan and Ohio, whereas the problems in
California and Florida were a combination of too many houses,
speculation and weak underwriting. Economic fundamentals are now
deteriorating in California and Florida. Over the past year,
Florida led the nation in job losses at 156,200, with California
losing 101,300, as compared with Michigan job losses at 71,200 and
Ohio at 17,300.
"In the last quarter we saw about 575,000 foreclosure actions
started, compared with an estimated 580,000 in the second quarter
and 535,000 in the first quarter. At this rate we are looking at
finishing 2008 at about 2.2 million foreclosure actions started.
Absent a recession, the 2009 number would likely have fallen by
several hundred thousand but the effects of job losses and general
economic deterioration make the 2009 outlook worse, particularly if
mortgage problems become more widespread," Brinkmann said.
Change from last quarter (second quarter of
The seasonally adjusted delinquency rate increased 41 basis points
to 4.34 percent for prime loans, increased 136 basis points to
20.03 percent for subprime loans, increased 29 basis points to
12.92 percent for FHA loans, and increased 46 basis points to 7.28
percent for VA loans.
The percent of loans in the foreclosure process increased 16
basis points to 1.58 percent for prime loans, and increased 74
basis points for subprime loans to 12.55 percent. FHA loans saw an
eight basis point increase in the foreclosure inventory rate to
2.32 percent, while the foreclosure inventory rate for VA loans
increased 13 basis points to 1.46 percent.
The non-seasonally adjusted foreclosure starts rate remained
unchanged for prime loans at 0.61 percent and decreased three basis
points for subprime loans to 4.23 percent. The rate was unchanged
for FHA loans at 0.95 percent and increased two basis points for VA
loans to 0.59 percent.
The seriously delinquent rate, the non-seasonally adjusted
percentage of loans that are 90 days or more delinquent, or in the
process of foreclosure, was up from both last quarter and from last
year. This measure is designed to account for inter-company
differences on when a loan enters the foreclosure process.
Compared with last quarter, the seriously delinquent rate
increased for all loan types. The rate increased 52 basis points
for prime loans to 2.87 percent, increased 171 basis points for
subprime loans to 19.56 percent, increased 62 basis points for FHA
loans to 6.05 percent, and increased 45 basis points for VA loans
percent to 3.45 percent.
Change from last year (third quarter of
On a year-over-year basis, the seasonally adjusted delinquency
rate increased for all loan types, except FHA loans. The
delinquency rate increased 122 basis points for prime loans,
increased 372 basis points for subprime loans, and increased 70
basis points for VA loans. The seasonally adjusted delinquency rate
was unchanged for FHA loans on a year over year basis.
The percent of loans in the foreclosure process increased 79
basis points for prime loans and 566 basis points for subprime
loans. The rate increased 10 basis points for FHA loans and 43
basis points for VA loans.
The non-seasonally adjusted foreclosure starts rate increased 29
basis points overall, 25 basis points for prime loans, 105 basis
points for subprime loans, one basis point for FHA loans, and 20
basis points for VA loans.
The seriously delinquent rate was 156 basis points higher for
prime loans and 818 basis points higher for subprime loans. The
rate also increased 51 basis points for FHA loans and 89 basis
points for VA loans.
For more information, visit www.mortgagebankers.org.