MBA: Mortgage Delinquencies Rise in Second Quarter

MBA: Mortgage Delinquencies Rise in Second Quarter

MBA: Mortgage Delinquencies Rise in Second Quarter

Source: MBA NewsLink

August 14, 2019

Mortgage delinquencies rose in the second quarter as the economy showed signs of slowing, putting more homeowners at risk, the Mortgage Bankers Association reported yesterday.

The MBA 2nd Quarter Mortgage Delinquency Survey reported the delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 4.53 percent of all loans outstanding, up by 11 basis points from the first quarter and by 17 basis points from a year ago.

The foreclosure inventory rate, representing the percentage of loans in the foreclosure process, fell to 0.90 percent in the second quarter–the lowest since fourth quarter 1995. However, the percentage of loans on which foreclosure actions started in the second quarter rose by two basis points to 0.25 percent.

“The unemployment rate remains quite low, but the national mortgage delinquency rate in the second quarter rose from both the first quarter and one year ago,” said Marina Walsh, MBA Vice President of Industry Analysis. “The economy is slowing, and this poses the risk of further increases in delinquency rates.”

The report said across loan types, the FHA delinquency rate posted the largest variance, increasing by 29 basis points from the first quarter and by 52 basis points from a year ago.”

“Heavy rains and flooding, extreme heat, and tornadoes in certain states during the spring, may have also contributed to the increase in the delinquency rate, as some borrowers likely faced disruption or hardship,” Walsh said.

Other key survey findings:

–Compared to the first quarter, the seasonally adjusted mortgage delinquency rate increased for all loans outstanding. By stage, the 30-day delinquency rate increased by four basis points to 2.62 percent; the 60-day delinquency rate remained unchanged at 0.81 percent; and the 90-day delinquency bucket increased by seven basis points to 1.10 percent.

–By loan type, the total delinquency rate for conventional loans increased by 15 basis points to 3.61 percent from the first quarter. The FHA delinquency rate increased by 29 basis points to 9.22 percent; while the VA delinquency rate decreased by 13 basis points to 4.24 percent over the previous quarter.

–On a year-over-year basis, total mortgage delinquencies increased for all loans outstanding. The delinquency rate increased by 16 basis points for conventional loans, increased by 52 basis points for FHA loans and increased by 27 basis points for VA loans from the previous year.

–The percentage of loans in the foreclosure process at the end of the second quarter fell to 0.90 percent, down two basis points from the first quarter and 15 basis points lower than one year ago, to the lowest foreclosure inventory rate since fourth quarter 1995.

–The serious delinquency rate (the percentage of loans 90 days or more past due or in the process of foreclosure) fell to 1.95 percent, a decrease of one basis point from the first quarter and a decrease of 35 basis points from a year ago. The serious delinquency rate was unchanged for conventional loans, down by 2 basis points for FHA loans and down by 6 basis points for VA loans from the previous quarter. From a year ago, the serious delinquency rate decreased by 35 basis points for conventional loans, by 43 basis points for FHA loans and by 22 basis points for VA loans.

–States with the largest increases in their overall delinquency rate were affected by weather-related issues. MBA said this could have resulted in an increase in delinquencies over the previous quarter of the following magnitude: West Virginia (86 basis points), Mississippi (81 basis points), Alabama (73 basis points), Indiana (73 basis points) and New Mexico (65 basis points).

Data were obtained in cooperation with MBA, which produces the National Delinquency Survey. The NDS has been conducted since 1953 and covers 38 million loans on one- to four- unit residential properties. Loans surveyed were reported by more than 100 lenders, including mortgage bank, commercial banks and thrifts.