Delinquencies continue to climb in latest MBA National Delinquency SurveyMortgagePress.comdelinquency rate, residential properties, MBA, National Delinquency Survey, foreclosure
The delinquency rate for mortgage loans on one-to-four-unit
residential properties rose to a seasonally adjusted rate of 7.88
percent of all loans outstanding as of the end of the fourth
quarter of 2008, up 89 basis points from the third quarter of 2008,
and up 206 basis points from one year ago, according to the
Mortgage Bankers Association's National Delinquency Survey.
Top line results
The delinquency rate breaks the record set last quarter and the
quarter-to-quarter jump is the also the largest. The records are
based on MBA data dating back to 1972.
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 fourth quarter was 3.30 percent, an
increase of 33 basis points from the third quarter of 2008 and 126
basis points from one year ago. The combined percent of loans in
foreclosure and at least one payment past due was 11.18 percent on
a seasonally adjusted basis and 11.93 percent on a non-seasonally
adjusted basis. Both of these numbers are the highest ever recorded
in the MBA delinquency survey.
The percentage of loans on which foreclosure actions were
started during the fourth quarter was 1.08 percent, up one basis
point from last quarter and up 20 basis points from one year
ago.
The percentages of loans 60 days past due, loans 90 days or more
past due, and loans in foreclosure all set new record highs,
breaking records set last quarter. The percentage of loans on which
foreclosure actions were started tied the record set in the first
quarter of 2008. The percentage of loans 30 days past due is still
well below the record set in the first quarter of 1985.
Increase in delinquencies show spreading impact of
recession
"Foreclosure inventory jumped sharply in the fourth quarter even
though the rate at which loans were entering foreclosure remained
unchanged," said Jay Brinkmann, MBA's chief economist and senior
vice president for research and economics. "This is mainly
attributable to various state and local moratoria on foreclosure
sales, the Fannie Mae and Freddie Mac halt on foreclosure sales
announced in late November, a general reluctance by servicers to
proceed with evictions in the last few weeks of December and a
slowing down caused by an overburdened legal process in some
areas."
"The rate of new foreclosures has remained essentially flat for
the last three quarters of 2008. This might be seen as a good sign
for mortgage performance, but most other measures point to exactly
the opposite conclusion. The percentage of loans 90 days or more
past due jumped sharply in the fourth quarter. Normally servicers
would have initiated foreclosure actions on a significant portion
of these loans but delayed doing so for a variety of reasons,
including working on loan modifications, complying with the
guidelines of different investors, and various delays in different
locales. In addition, some servicers report a spate of borrowers
running their accounts 90 days delinquent in order to qualify for
certain modifications," Brinkmann said.
"Sub-prime ARM loans and prime ARM loans, which include Alt-A
and pay option ARMs, continue to dominate the delinquency numbers.
Nationwide, 48 percent of subprime ARMs were at least one payment
past due and in Florida over 60 percent of subprime ARMs were at
least one payment past due.
"We will continue to see, however, a shift away from
delinquencies tied to the structure and underwriting quality of
loans to mortgage delinquencies caused by job and income losses.
For example, the 30-day delinquency rate for subprime ARMs
continues to fall and is at its lowest point since the first
quarter of 2007. Absent a sudden increase in short-term rates, this
trend should continue because the last 2-28 subprime ARMs (fixed
payment for two years and adjustable for the next 28 years) were
written in the first half of 2007. The problem with initial resets
is largely behind us, although the impact of the resets was
generally overstated.
"The delinquency rates continue to climb across the board for
prime fixed-rate and subprime fixed-rate loans, loans whose
performance is driven by the loss of jobs or income rather than
changes in payments," Brinkmann said.
"While California, Florida, Nevada, Arizona and Michigan
continue to dominate the delinquency numbers, some of the sharpest
increases we saw last quarter in loans 90 days or more delinquent
were in Louisiana, New York, Georgia, Texas and Mississippi, signs
of the spreading impact of the recession," Brinkmann said.
Change from last quarter (third quarter of
2008)
The seasonally adjusted delinquency rate increased 72 basis points
to 5.06 percent for prime loans, increased 185 basis points to
21.88 percent for subprime loans, increased 81 basis points to
13.73 percent for FHA loans, and increased 24 basis points to 7.52
percent for VA loans.
The percent of loans in the foreclosure process increased 30
basis points to 1.88 percent for prime loans, and increased 116
basis points for subprime loans to 13.71 percent. FHA loans saw an
11 basis point increase in the foreclosure inventory rate to 2.43
percent, while the foreclosure inventory rate for VA loans
increased 20 basis points to 1.66 percent.
The non-seasonally adjusted foreclosure starts rate increased
seven basis points to 0.68 percent for prime loans and decreased 27
basis points for subprime loans to 3.96 percent. The rate was
unchanged for FHA loans at 0.95 percent and increased six basis
points for VA loans to 0.65 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 87 basis points
for prime loans to 3.74 percent, increased 355 basis points for
subprime loans to 23.11 percent, increased 93 basis points for FHA
loans to 6.98 percent, and increased 67 basis points for VA loans
percent to 4.12 percent.
Change from last year (fourth quarter of
2007)
On a year-over-year basis, the seasonally adjusted delinquency
rate increased for all loan types. The delinquency rate increased
182 basis points for prime loans, increased 457 basis points for
subprime loans, increased 68 basis points for FHA loans, and
increased 103 basis points for VA loans.
The percent of loans in the foreclosure process increased 92
basis points for prime loans and 506 basis points for subprime
loans. The rate increased nine basis points for FHA loans and 54
basis points for VA loans.
The non-seasonally adjusted foreclosure starts rate increased 25
basis points for prime loans, 25 basis points for subprime loans,
and 22 basis points for VA loans. It was unchanged for FHA
loans.
The seriously delinquent rate was 207 basis points higher for
prime loans and 867 basis points higher for subprime loans. The
rate also increased 98 basis points for FHA loans and 129 basis
points for VA loans.
For more information, visit www.mortgagebankers.org.
