Mortgage Delinquencies Fall to Lowest Level Since ’08

Nearly every state in the nation saw foreclosure inventory drop in the fourth quarter of 2013, with the delinquency rate at its lowest level since early 2008, now at 6.39% of loans outstanding. 

The delinquency rate is down nationally, according to the latest figures from the Mortgage Bankers Association, having decreased two basis points during the fourth quarter of 2013 and down 70 basis points from a year ago. 

MBA tracks delinquencies based on loans that are at least one payment past due but are not in the process of foreclosure. 

“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 percent, is more than 3 percentage points lower than its peak of over 10 percent in 2010 and is edging closer to the historical average of around 5 percent.”

MBA also reported specifically on FHA delinquencies, finding on average, FHA delinquencies are still declining overall. 

“The total past due rate for FHA loans increased over the quarter by 41 basis points, but is still down 70 points relative to last year at this time. The increase for the quarter was driven by a 37 basis point increase in loans one payment past due. The foreclosure measures for FHA loans declined both over the quarter and relative to last year,” Fratantoni said. 

Historically, past defaults have not been a lending criteria for reverse mortgage borrowers, but the Department of Housing and Urban Development has hinted that a forthcoming financial assessment could consider borrower payment history among its criteria for qualifying.

Written by Elizabeth Ecker

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