The delinquency rate for mortgages on one-to-four-unit residential properties contracted to 7.58% of all loans outstanding in the second quarter of 2012, according to the Mortgage Bankers Association. The seasonally adjusted rate is 18 basis points above first-quarter levels, but 86 bps below the rate reached at the end of second quarter 2011.
Loans that are at least one payment past due are included in the deliquency rate, while loans in the process of foreclosure are not.
The percentage of loans on which foreclosure actions were started during the second quarter is 0.96%, unchanged from the first quarter and from a year earlier.
MBA Chief Economist Jay Brinkmann said the unchanged rate of new foreclosure filings would have fallen were it not for the considerable jump in foreclosure starts on Federal Housing Administration-backed loans.
“This quarter’s rate set an all-time record for FHA loans, but it was only slightly higher than the previous high set in 2010,” Brinkmann said. “The jump was due to one or more large servicers of FHA loans restarting foreclosure actions on delinquent FHA loans after the completion of the Department of Justice review and the mortgage servicing settlement.”
The percentage of loans in the foreclosure process at the end of the quarter is 4.27%, down 12 basis points from the first quarter and 16 basis points lower than the year-ago rate.
The second-quarter serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, fell to 7.31% from 7.43% from last quarter and 7.85% from a year ago.
Mortgage delinquencies expanded slightly over the last quarter. Perhaps more important than the small size of the increase, Brinkmann pointed out, is that it reversed the trend of fairly steady drops in delinquencies we have seen over the last year.
“This is consistent with the slowdown in the economy during the first half of the year and our stubbornly high unemployment rate,” he continued. “Whether this is just a temporary blip or a sign of a true change in direction for mortgage performance will fundamentally depend on the direction of employment over the remainder of the year.”
Compared with the year-ago period, the foreclosure inventory rate declined 14 bps for prime fixed loans, 85 bps for prime ARM loans and 86 bps for subprime fixed. The rate shrunk 111 bps for subprime ARM loans, two bps for VA loans, but increased 99 basis points for FHA loans.