Foreclosure Measures at Multi-Year Lows; Some States Still Increasing

Both mortgage delinquency rates and the foreclosurerninventory rate hit their lowest points in five years at the end of the fourthrnquarter of 2013. The National Delinquency Survey conducted by the MortgagernBankers Association (MBA) showed a two basis point decline during the quarter inrnthe rate of mortgages that are at least one payment past due and a 22 basis pointrndrop in the number of mortgages in some stage of the foreclosure process.</p

The delinquency rate for one-to-fourrnfamily loans, which does not include loans in foreclosure, was at a seasonallyrnadjusted rate of 6.39 percent at the end of the fourth quarter compared to 6.41rnpercent in the third.  This was a drop ofrn70 basis points from the fourth quarter of 2012 and the lowest level since thernfirst quarter of 2008.  </p

The foreclosure inventory was at 2.86rnpercent, the lowest since 2008.  This wasrna -22 basis point change from the third quarter and down 88 basis points from arnyear earlier.</p

Foreclosures were initiated on 0.54rnpercent of mortgages in the quarter. rnThis rate was down 7 basis points quarter-over-quarter and was thernlowest rate for foreclosure starts since 2006.</p

Serious delinquencies, those over 90rndays or in foreclosure affected 5.41 percent of mortgage loans.  This was a decline of 24 basis points fromrnthe previous quarter and 137 basis points from the same period in 2012. </p

“We continue to see substantial improvement inrnboth delinquency and foreclosure rates, with most measures now back tornpre-crisis levels,” said Michael Fratantoni, MBA’s Chief Economist and SeniorrnVice President of Research and Industry Technology.  “The delinquencyrnrate, at 6.39 percent, is more than 3 percentage points lower than its peak ofrnover 10 percent in 2010 and is edging closer to the historical average ofrnaround 5 percent.  The percentage of loans in foreclosure has fallen forrnthe seventh consecutive quarter, decreasing to 2.86 percent, the lowest levelrnin six years.  The percentage of new foreclosures started, at 0.54rnpercent, is the lowest in eight years and is back within its typical historicalrnrange.  </p

Forty-nine states and the District of Columbia sawrnforeclosure rates decline.  Florida stillrnhas the highest foreclosure inventory at 8.56 percent, but the state was atrn14.5 percent at its peak.  New Jersey andrnNew York had the second and third highest rate. rnMBA said that states with judicial foreclosure systems still account forrnmost of the loans in foreclosure.  Of the 17 states that were above thernnational average on this measure 15 were judicial states.  While foreclosure inventories in both typesrnof states are decreasing the average rate is 4.92 percent in judicial statesrnand 1.52 percent in nonjudicial states.<br /<br /Fratantoni said that about one fifth of all states saw an increase in foreclosurernstarts, but quarterly movements in this measure have often been the result ofrnchanging state laws. The timing associated with these changes andrnimplementation have resulted in swings in the foreclosure start rate; these arernsometimes offset by changes in the serious delinquency category</p

FHA delinquencies increased over the quarter by 41rnbasis points, but are still down 70 points relative to a year ago.  The growth was driven by a 37 basis pointrnincrease in loans one payment past due while foreclosure measures declined bothrnquarter to quarter and year-over-year.</p

The National Delinquency Survey has been conductedrnby MBA since 1953.  It covers 41 millionrnloans, representing approximately 88 percent of all senior residential mortgagernloans on one-to-four family houses.  This quarter’s loan count saw a decrease ofrn360,000 loans from the previous quarter, and a decrease of 1,200,000 loans fromrnone year ago. Loans surveyed were reported by approximately 120 lenders,rnincluding mortgage bankers, commercial banks, and thrifts.

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