The seasonally-adjusted delinquency rate for mortgage loans on one- to four-unit residential properties stood at 6.35 percent of all loans outstanding at the end of the first quarter of 2008 on a seasonally-adjusted basis, up 53 basis points from the fourth quarter of 2007, and up 151 basis points from one year ago, according to MBAs National Delinquency Survey. 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 was 2.47 percent at the end of the first quarter, an increase of 43 basis points from the fourth quarter of 2007 and 119 basis points from one year ago.
The percentage of loans on which foreclosure actions were started during the quarter was 0.99 percent on a seasonally-adjusted basis, 16 basis points higher than the previous quarter and up 41 basis points from one year ago.
The seasonally-adjusted total delinquency rate is the highest recorded in the MBA survey since 1979, however the non-seasonally adjusted delinquency rate is not. Delinquency rates normally peak at the end of the year and drop to their lowest point for the year at the end of the first quarter. The non-seasonally-adjusted rate is down 67 basis points from the fourth quarter but up 131 basis points from the first quarter of last year. The increase in the overall delinquency rate was driven by increases in the number of loans 60 and 90 or more days past due, primarily in California and Florida.
The 30-day delinquency percentage is still below levels seen as recently as 2002. Once again this quarter, the rate of foreclosure starts and the percent of loans in the process of foreclosure are the highest recorded since 1979.
"While the foreclosure start rates were up for all types of mortgages, a reflection of the decline in home prices, the magnitude of the national increases is clearly driven by certain loan types and certain states," said Jay Brinkmann, MBA's vice president of research and economics. "For example, while sub-prime ARMs represent 6 percent of the loans outstanding, they represented 39 percent of the foreclosures started during the first quarter. Prime ARMs represent 15 percent of the loans outstanding, but 23 percent of the foreclosures started. Out of the approximately 516,000 foreclosures started during the first quarter, sub-prime ARM loans accounted for about 195,000 and prime ARM loans 117,000, but the increase in prime ARM foreclosures exceeded subprime ARM foreclosures with increases of 29,000 and 20,000 respectively over the previous quarter."
The foreclosure start rate differed considerably by loan type. For example:
• Prime fixed rate loan foreclosure starts increased 7 basis points to 0.29 percent over the previous quarter and prime ARM foreclosure starts increased 49 basis points to 1.55 percent.
• Sub-prime fixed foreclosure starts increased 28 basis points to 1.80 percent and sub-prime ARM foreclosure starts increased 106 basis points to 6.35 percent.
• FHA foreclosure starts decreased four basis points to 0.87 percent and VA foreclosure starts increased 11 basis points to 0.39 percent.
"The problems in California and Florida are extraordinary and they are the main drivers of the national trend. The quarterly rate of foreclosure starts on subprime ARM loans in California was 9.24 percent. This rate, combined with Florida's rate of 8.25 percent, drove up the national average foreclosure start rate to the point where 43 states were below the national average of 6.32 percent. California saw a total of approximately 109,000 foreclosure starts and Florida 77,000. The next highest states were Texas, Michigan and Ohio with between 24,000 and 20,000 each.
"California, Florida, Arizona and Nevada combined represent:
• 62 percent of all foreclosures started on prime ARM loans, and 84 percent of the increase in prime ARM foreclosures
• 49 percent of all of the subprime ARM foreclosures started in the country during the 1st quarter, and were responsible for 93 percent of the increase in subprime ARM foreclosures
• 29 percent of prime fixed-rate foreclosures and 60 percent of the increase in those foreclosures
• 25 percent of subprime fixed-rate foreclosures and 53 percent of the increase in those foreclosures
"About 20 states had drops in their number of foreclosures started, including Michigan, Ohio and Indiana where problems have been the most severe for the last several years," Brinkmann said.
Change from last quarter (fourth quarter of
The seasonally-adjusted delinquency rate increased 47 basis points for prime loans (from 3.24 percent to 3.71 percent) and 148 basis points for sub-prime loans (from 17.31 percent to 18.79 percent). The delinquency rate decreased 33 basis points for FHA loans (from 13.05 percent to 12.72 percent) and increased 73 basis points for VA loans (from 6.49 percent to 7.22 percent).
The foreclosure inventory rate increased 26 basis points for prime loans (from 0.96 percent to 1.22 percent), and increased 209 basis points for subprime loans (from 8.65 percent to 10.74 percent). FHA loans saw a six basis point increase in foreclosure inventory rate (from 2.34 percent to 2.4 percent), while the foreclosure inventory rate for VA loans increased 12 basis points (from 1.12 percent to 1.24 percent).
The seasonally-adjusted foreclosure starts rate increased 13 basis points for prime loans (from 0.41 percent to 0.54 percent), 62 basis points for subprime loans (from 3.44 percent to 4.06 percent), and 11 basis points for VA loans (from 0.39 percent to 0.5 percent). The foreclosure starts rate decreased four basis points for FHA loans (from 0.91 percent to 0.87 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, except FHA loans. The rate increased 32 basis points for prime loans (from 1.67 percent to 1.99 percent), increased 198 basis points for sub-prime loans (from 14.44 to 16.42 percent), increased five basis points for VA loans (from 2.83 percent to 2.88 percent) and decreased 41 basis points for FHA loans (from 6 percent to 5.59 percent).
Change from last year (first quarter of
Compared with the first quarter of 2007, the seasonally-adjusted delinquency rate increased for all loan types. The delinquency rate increased 113 basis points for prime loans, increased 502 basis points for sub-prime loans, increased 57 basis points for FHA loans, and increased 73 basis points for VA loans. The foreclosure inventory rate increased 68 basis points for prime loans and 564 basis points for sub-prime loans. The foreclosure inventory rate also increased 21 basis points for FHA loans and 19 basis points for VA loans.
The seasonally-adjusted foreclosure starts rate increased 29 basis points for prime loans, 163 basis points for subprime loans, and nine basis points for VA loans. For FHA loans, the foreclosure starts rate decreased three basis points from the first quarter of 2007. On a year-over-year basis, the seriously delinquent rate was 110 basis points higher for prime loans and 809 basis points higher for subprime loans. The rate also increased 33 basis points for FHA loans and 43 basis points for VA loans.
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