Photo credit: Amy Berkson-Martin
Subprime loans see largest declines in delinquent metrics
Home value appreciation and job growth have contributed to dropping mortgage delinquency and foreclosure rates down to levels not seen since 2007.
The Mortgage Bankers Association (MBA) conducted the National Delinquency Survey and reports the delinquency rate on mortgage loans for one-to-four-unit residential properties declined to a seasonally adjusted rate (SAR) of 5.54 percent of all outstanding loans at the end of the first quarter of 2015, the lowest since the second quarter of 2007. Delinquent loans are at least one payment behind, but are not in the process of foreclosure; dropped 14 basis points from the fourth quarter of 2014 and year-over-year (YOY), declined 57 basis points.
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Loans in foreclosure were 2.22 percent at the end of the first quarter, down five basis points from the previous quarter and 43 basis points lower YOY. This is the lowest foreclosure rate since the fourth quarter of 2007.
Initiated foreclosure actions were 0.45 percent of all mortgage loans, a drop of one basis point from the fourth quarter of 2014 and unchanged from the first quarter of 2014.
Serious delinquencies, loans which are 90 days or more past due or in the process of foreclosure, declined 28 basis points from the previous quarter and 80 basis points YOY to 4.24 percent of all mortgage loans.
“Delinquency rates and the percentage of loans in foreclosure continued to fall in the first quarter and are now at their lowest levels since 2007,” said Joel Kan, MBA’s associate vice president of industry surveys and forecasting. “The job market continues to grow, and this is the most important fundamental improving mortgage performance. Additionally, home prices continued to rise, as did the pace of sales, thus increasing equity levels and enabling struggling borrowers to sell if needed.”
In the first quarter, the overall delinquency rate dropped 14 basis points to 5.54 percent when seasonally adjusted. Subprime loans saw the largest decline with 90 basis points to 17.60 percent of all loans, the FHA delinquency rate dropped by 63 basis points to 9.10 percent, prime loans fell 7 basis points to 3.18 percent and VA loans were the only loan type to report an increase, 4 basis points to 5.02 percent of all loans.
Overall foreclosure starts decreased 1 basis point to 0.45 percent of all loans, subprime foreclosure starts dropped 34 basis points to 1.39 percent, FHA loans had a 9 basis point rise in the number of initiated foreclosures, to 0.70 percent, prime loan foreclosure starts increased 1 basis point to 0.28 percent and foreclosure starts for VA loans increased 1 basis point to 0.37 percent.
The delinquency rate for all loans fell 55 basis points YOY. During the same period, subprime loans fell 214 basis points, FHA declined 65 basis points, VA decreased 35 basis points and prime loans fell 33 basis points.
Foreclosure inventory rate YOY, fell 110 basis points for subprime loans, prime loan foreclosure inventory rate decreased 37 basis points, FHA loans declined 36 basis points and 27 basis points for VA loans.
Compared to the first quarter 2014, both subprime and FHA loans saw 6 basis point increases in foreclosure starts, prime loans saw a 1 basis point decline and 2 basis points decrease in foreclosure starts for VA loans.
Four states and the District of Columbia with the highest percentage of foreclosures (CoreLogic-January 2015)
New Jersey-5.2 percent
New York- 4.0 percent
Florida- 3.5 percent
Hawaii- 2.7 percent
D.C.- 2.5 percent
Five states with the lowest percentage of foreclosures (CoreLogic-January 2015)
Alaska- 0.3 percent
Nebraska- 0.4 percent
North Dakota- 0.4 percent
Arizona- 0.5 percent
Montana- 0.5 percent
Resources:
ConsumerAffairs.com. Mortgage delinquencies and foreclosures fall in first quarter
CoreLogic. National Foreclosure Report- January 2015
World Property Journal. U.S. Home Foreclosure Inventory Down 33 Percent