The delinquency rate for mortgage loans on one- to four-unit residential properties decreased to a seasonally adjusted rate of 6.04 percent of all loans outstanding at the end of the second quarter of 2014, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. This is the fifth consecutive quarter of declines and the lowest level for the delinquency rate since the fourth quarter of 2007.
The delinquency rate decreased seven basis points from the previous quarter, and 92 basis points from one year ago, according to the MBA. 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 at the end of the second quarter was 2.49 percent, down 16 basis points from the first quarter and 84 basis points lower than one year ago. This was the lowest foreclosure inventory rate seen since the first quarter of 2008.
"Delinquency and foreclosure rates fell to their lowest levels in more than six years, and the rate of new foreclosure starts is at its lowest level since 2006," Mike Fratantoni, the MBA’s chief economist, said in a statement. "Strong job growth and continued increases in home prices in most markets have been the main contributors to these steady improvements in mortgage performance."
The percentage of loans on which foreclosure actions were started during the second quarter fell to 0.40 percent from 0.45 percent, a decrease of five basis points, and reached the lowest level since the second quarter of 2006.
The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 4.80 percent, a decrease of 24 basis points from last quarter, and a decrease of 108 basis points from the second quarter of last year. Similar to the previous quarter, 75 percent of seriously delinquent loans were originated in 2007 and earlier. Loans with vintages started in 2011 and later only accounted for six percent of all seriously delinquent loans.
"The loans that are seriously delinquent, either 90-plus days late or in the foreclosure process, were primarily made prior to the downturn, with 75 percent of them originated in 2007 or earlier. Loans made in recent years continue to perform extremely well due to the improving market and tight credit conditions," Fratantoni said in a statement.
"The declining trend in later stage delinquencies and foreclosure measures is clearly continuing at the national level," added Joel Kan, MBA’s director of economic forecasting, in a statement. "Some states hardest hit by the crisis, for example California and Arizona, now have foreclosure inventory rates that are both back to pre-crisis levels and less than half the current national rate.
"On the other hand, despite declines last quarter, states with slower-moving judicial foreclosure regimes, like New Jersey, Florida and New York, have foreclosure inventory rates two to three times the national average," Kan continued. "There were 18 states with a higher foreclosure inventory rate than the national average, and 15 of those were judicial states. Judicial states are also starting to see more foreclosure starts than non-judicial states, whereas there used to be no clear tendency for either foreclosure regime in the past quarters."
