The delinquency rate for mortgage loans on one- to four-unit residential properties decreased to a seasonally adjusted rate of 7.58 percent of all loans outstanding as of the end of the fourth quarter of 2011, a decrease of 41 basis points from the third quarter of 2011, and a decrease of 67 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased five basis points to 8.15 percent this quarter from 8.20 percent last quarter.
The percentage of loans on which foreclosure actions were started during the fourth quarter was 0.99 percent, down nine basis points from last quarter and down 28 basis points 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 percent, down five basis points from the third quarter and 26 basis points 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 percent, a decrease of 16 basis points from last quarter, and a decrease of 87 basis points from the fourth quarter of last year.
The combined percentage of loans in foreclosure or at least one payment past due was 12.63 percent on a non-seasonally adjusted basis, a 10 basis point decrease from last quarter and was 107 basis points 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. The total delinquency rate and foreclosure starts rate decreased and are back down to levels from three years ago," said said Jay Brinkmann, MBA's chief economist and SVP of research and education. "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, employment is the key driver of mortgage performance and the mortgage delinquency rate is actually falling faster than the unemployment rate is declining."
On a seasonally adjusted basis, the overall delinquency rate decreased for all loan types except FHA loans. The seasonally adjusted delinquency rate decreased 20 basis points to 4.12 percent for prime fixed loans and decreased 151 basis points to 9.22 percent for prime adjustable-rate mortgages (ARMs). For subprime loans, the delinquency rate decreased 157 basis points to 19.67 percent for sub-prime fixed loans and decreased 267 basis points to 22.40 percent for sub-prime ARM loans. VA loans also saw a decline, with the delinquency rate decreasing three basis points to 6.55, while the delinquency rate for FHA loans increased 27 basis points to 12.36.
The percent of loans in foreclosure, also known as the foreclosure inventory rate, decreased from last quarter to 4.38 percent. The foreclosure inventory rate for prime fixed loans declined four basis points to 2.52 percent and the rate for prime ARM loans decreased 33 basis points from last quarter to 8.72 percent. For subprime loans, the rate for sub-prime ARM loans decreased 56 basis points to 22.17 percent and the rate for sub-prime fixed loans decreased 17 basis points to 10.65. In contrast, the foreclosure inventory rate for FHA loans increased 27 basis points to 3.54 while the rate for VA loans increased 12 basis points to 2.37.
The non-seasonally adjusted foreclosure starts rate decreased seven basis points for prime fixed loans to 0.62 percent, 33 basis points for prime ARM loans to 1.83 percent, 17 basis points for sub-prime fixed to 2.33 percent and 86 basis points for sub-prime ARMs to 3.79 percent. The foreclosure starts rate increased 10 basis points for FHA loans to 0.88 percent and four basis points for VA loans to 0.60 percent.
Compared with the fourth quarter of 2010, the foreclosure inventory rate decreased 150 basis points for prime ARM loans and decreased 15 basis points for prime fixed loans, while the foreclosure inventory rate increased 79 basis points for sub-prime fixed, 17 basis points for sub-prime ARM loans, 24 basis points for FHA loans and two basis points for VA loans.
Over the past year, the non-seasonally adjusted foreclosure starts rate decreased 22 basis points for prime fixed loans, 55 basis points for prime ARM loans, 42 basis points for sub-prime fixed, 45 basis points for sub-prime ARM loans, 14 basis points for FHA loans and 28 basis points for VA loans.
