Lunch & Learn: The State of Housing

As housing supply dwindles, affordability concerns grow while competition heats up the market. This Lunch & Learn will examine the current state of housing, featuring experts who have an eye on the market.

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Mortgage

Delinquency and foreclosure rates decline to 2008 lows

MBA survey shows strength in market

The Mortgage Bankers Association’s national delinquency survey shows that the delinquency rate for mortgage loans on one-to-four-unit residential properties fell to its lowest level since the first quarter of 2008.

The rate fell to a seasonally adjusted rate of 6.39% of all loans outstanding at the end of the fourth quarter of 2013. Furthermore, the delinquency rate decreased two basis points from the previous quarter, and 70 basis points from one year ago.

"We continue to see substantial improvement in both delinquency and foreclosure rates, with most measures now back to pre-crisis levels," said Michael Fratantoni, MBA’s Chief Economist and Senior Vice President of Research and Industry Technology.  "The delinquency rate, at 6.39%, is more than 3 percentage points lower than its peak of over 10% in 2010 and is edging closer to the historical average of around 5%. The percentage of loans in foreclosure has fallen for the seventh consecutive quarter, decreasing to 2.86%, the lowest level in six years. The percentage of new foreclosures started, at 0.54%, is the lowest in eight years and is back within its typical historical range."

For definition’s purpose, 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 fourth quarter was 2.86%, down 22 basis points from the third quarter and 88 basis points lower than one year ago.  This was the lowest foreclosure inventory rate seen since 2008.

The non-seasonally adjusted percentage of loans on which foreclosure actions were started during the fourth quarter decreased to 0.54% from 0.61%, a decrease of seven basis points, and the lowest level since 2006.

The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 5.41%, a decrease of 24 basis points from last quarter, and a decrease of 137 basis points from the fourth quarter of last year. 

“There was broad improvement in foreclosure rates in the fourth quarter, with 49 states and the District of Columbia recording a decrease. Florida still leads the nation in the percentage of loans in foreclosure, but that percentage has fallen to 8.56% from a peak of 14.5%. New Jersey and New York had the next two highest rates but both states did see a drop from the previous quarter.  States with judicial foreclosure systems still account for most of the loans in foreclosure,” Fratantoni said. 

“Of the 17 states that had a higher foreclosure inventory rate than the national average, 15 were judicial states. While the percentage of loans in foreclosure dropped in both judicial and nonjudicial states, the average rate for judicial states was 4.92% compared to the average rate of 1.52% for nonjudicial states. That being said, for judicial states this was still a significant improvement from the rate of 6.88% recorded in 2012,” he added.

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