The delinquency rate for mortgage loans on one- to four-unit residential properties was reached a seasonally adjusted rate of 4.88 percent of all loans outstanding at the end of the third quarter, up 64 basis points from the previous quarter and up 36 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey
However, the percentage of loans on which foreclosure actions were started during the third quarter was 0.25 percent, only one basis point down from the previous quarter and five basis points lower than one year ago. The percentage of loans in the foreclosure process at the end of the third quarter was 1.23 percent, down six basis points from the previous quarter and 32 basis points below the third quarter of 2016. The serious delinquency rate was 2.52 percent in the third quarter, three basis points up from the previous quarter but 44 basis points down from one year ago.
Marina Walsh, MBA’s Vice President of Industry Analysis, acknowledged the disruptions created by the recent hurricanes that hit the southeastern states, but she also noted there were other issues that fueled the increased delinquency rate.
“First, there were timing issues associated with the last day of the month being a Saturday,” Walsh said. “Processing for mortgage payments made over the weekend did not occur until Monday, Oct. 2, and thus, these mortgage payments were identified as 30-days delinquent per NDS definitions. Second, delinquency rates were already at historic lows in the second quarter of 2017. The FHA and VA delinquency rates were at their lowest levels since 1996 and 1979 respectively, while the conventional delinquency rate reached its lowest level since 2005. It would not be unexpected for delinquencies to eventually increase from these levels.
“Other factors to consider include seasonality, rising loan-to-value and debt-to-income ratios for certain product types, normal loan aging, and declining average credit scores on new FHA endorsements since 2014 as the agency has withdrawn from its counter-cyclical role during the crisis,” Walsh said.