According to the Mortgage Bankers Association foreclosures are up slightly despite delinquencies falling to pre-housing crisis lows and continuing to slide.
MBA’s first quarter National Delinquency Report shows the delinquency rate for mortgage loans on one-to-four unit residential properties dropped to a seasonally adjusted rate of 4.63% in the first quarter, which translates to a 54 basis point drop from Q4 and an eight point drop year-over-year.
Foreclosures rose slightly to 0.28%, a three basis point increase from last year, and two basis point decrease from last year.
That said, the good news is that the number of loans entering the foreclosure process took a significant tumble, falling 23 basis points from last year to 1.16%, a three basis point decrease from Q4. This was the lowest foreclosure inventory rate since Q3 2006, according to the report.
MBA's Vice President of Industry Analysis Marina Walsh points to a number of factors leading to this uptick in performance evident in Q1.
"The strong economy, low unemployment rate, tax refunds and bonuses and home price appreciation were key factors that helped push delinquencies down in the first quarter," Walsh said in the report analysis.
"Of course, there are offsetting factors that may put upward pressure on delinquency rates in future quarters, including a difficult recovery for some borrowers in hurricane-impacted states; the aging of loan portfolios; higher interest rates that limit a borrower's rate-term refinance options; higher energy prices; stretching of housing affordability given limited supply; and the easing of credit overlays as mortgage market conditions have changed," she added.
According to the report, Texas and Florida appear to have hit their peak delinquencies following the storms. Texas’ non-seasonally adjusted overall mortgage delinquency rate dropped by 171 basis points to 5.62% in Q1. Prior to Harvey, in the Q2 2017, the rate was 5.05%. Florida underwent a 230 basis point drop this quarter, hitting 6.59%. Before Hurricane Harvey happened, MBA reported that number was 4.07%.
MBA notes that forbearance is in place for many of the borrowers affected by the storms, but the MBA survey used to make the report defines delinquency as any situation in which payment was not made in accordance with the original terms of the mortgage. Bear in mind that four of the five states with the highest 90+ day delinquency rate in Q1 were states that Harvey hit, namely Florida, Mississippi, Louisiana and Texas. New Jersey was the other state.