The delinquency rate for mortgage loans on one- to-four-unit residential properties fell to a seasonally adjusted rate of 7.40 percent of all loans outstanding as of the end of the third quarter of 2012, a decrease of 18 basis points from the second quarter of 2012, and a decrease of 59 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 29 basis points to 7.64 percent this quarter from 7.35 percent last quarter. Delinquency rates typically increase between the second and third quarters of the year.
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 on which foreclosure actions were started during the third quarter was 0.90 percent, down six basis points from last quarter and down 18 basis points from one year ago. The percentage of loans in the foreclosure process at the end of the third quarter was 4.07 percent, down 20 basis points from the second quarter and 36 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 7.03 percent, a decrease of 28 basis points from last quarter, and a decrease of 86 basis points from the third quarter of last year.
The combined percentage of loans in foreclosure or at least one payment past due was 11.71 percent on a non-seasonally adjusted basis, a nine basis point increase from last quarter, but a 92 basis points decrease from the same quarter one year ago.
“Mortgage delinquencies decreased compared to last quarter overall, driven mainly by a decline in loans that are 90 days or more delinquent,” said Mike Fratantoni, MBA’s vice president of research and economics. “The 90-day delinquency rate is at its lowest level since 2008, and together with the decline in the percentage of loans in foreclosure, this indicates a significant drop in the shadow inventory of distressed loans-a real positive for the housing market. The 30 day delinquency rate increased slightly, but remains close to the long-term average for this metric. Given the weak economic and job growth in third quarter, it is not surprising that this metric has not improved.”
On a seasonally adjusted basis, the overall delinquency rate decreased for all loan types except subprime ARM loans. The seasonally adjusted delinquency rate decreased 19 basis points to 4.05 percent for prime fixed loans and decreased 49 basis points to 8.70 percent for prime ARM loans. For sub-prime loans, the delinquency rate decreased 62 basis points to 19.23 percent for subprime fixed loans and increased 35 basis points to 22.95 percent for subprime ARM loans. The delinquency rate for VA loans fell by 31 basis points to 6.34 while the FHA delinquency rate declined by 75 basis points to 11.14.
The percentage of loans in foreclosure, also known as the foreclosure inventory rate, decreased from last quarter to 4.07 percent. The foreclosure inventory rate for prime fixed loans decreased eight basis points to 2.34 percent and the rate for prime ARM loans decreased 49 basis points from last quarter to 7.82 percent. For subprime loans, the rate for subprime ARM loans decreased 182 basis points to 19.30 percent and the rate for subprime fixed loans decreased 79 basis points to 9.36. The foreclosure inventory rate for FHA loans decreased 15 basis points to 4.08 while the rate for VA loans decreased seven basis points to 2.21.
The non-seasonally adjusted foreclosure starts rate decreased eight basis points for prime ARM loans to 1.47 percent, seven basis points for subprime fixed to 1.91 percent and 41 basis points for FHA loans to 1.12 percent. The foreclosure starts rate increased one basis point for prime fixed loans to 0.54 percent, 20 basis points for subprime ARM loans to 3.40 percent and nine basis points for VA loans to 0.57 percent.
Compared with the third quarter of 2011, the foreclosure inventory rate decreased 22 basis points for prime fixed loans, 123 basis points for prime ARM loans, 146 basis points for subprime fixed, 343 basis points for subprime ARM loans, four basis points for VA loans but increased 81 basis points for FHA loans. Over the past year, the non-seasonally adjusted foreclosure starts rate decreased 15 basis points for prime fixed loans, 69 basis points for prime ARM loans, 59 basis points for subprime fixed, 125 basis points for subprime ARM loans but increased 34 basis points for FHA loans and one basis point for VA loans.
