|More than one-in-nine U.S. home mortgages was either in default or in foreclosure at the end of last year. But signs of life are emerging on the U.S. subprime portfolio.
Seasonally adjusted residential delinquency of at least 30 days was 7.88 percent as of Dec. 31, 2008, the Mortgage Bankers Association reported today in its National Delinquency Survey. Delinquency -- which excludes loans in foreclosure -- rose from 6.99 percent on Sep. 30, 2008, and 5.82 percent on Dec. 31, 2007.
MBA said the data reflected 45,396,181 total loans, including 34,977,566 prime loans, 5,302,130 subprime mortgages and 3,991,814 loans insured by the Federal Housing Administration. Another 1,124,671 mortgages were guaranteed by the Department of Veteran Affairs.
Looking at just prime mortgages, seasonally adjusted delinquency of at least 30 days was 5.06 percent at December's end, climbing from 4.34 percent at the end of September. Subprime delinquency was 21.88 percent, rising from 20.03 percent, and late payments on FHA loans were 13.73 percent -- jumping from 12.92 percent.
Delinquency was highest in Mississippi, where it stood at 13.11 percent at the end of last year. Nevada was next, with late payments at 11.12 percent, followed by Florida, at 11.09 percent.
North Dakota had the lowest delinquency rate -- at 3.56 percent.
The causes of delinquency are expected to shift from bad underwriting to employment and income losses.
"For example, the 30-day delinquency rate for subprime ARMs continues to fall and is at its lowest point since the first quarter of 2007," MBA Chief Economist Jay Brinkmann said in the report. "Absent a sudden increase in short-term rates, this trend should continue because the last 2-28 subprime ARMs ... were written in the first half of 2007.
"The problem with initial resets is largely behind us, although the impact of the resets was generally overstated."
The report indicated that a surge in serious delinquency of at least 90 days to 23.11 percent was primarily due to a reluctance by servicers to move many of their delinquent loans through the foreclosure process.
Foreclosures were started on 1.01 percent of residential loans during the fourth quarter, better than 1.07 percent in the third quarter, according to MBA's data. The decline was likely tied to moratoria implemented by private companies and government entities during the latest period.
Averaging all four quarters of last year, the foreclosure start rate was 1.06 percent, jumping from 0.71 percent in 2007.
Foreclosures started on prime loans during the latest quarter were 0.63 percent, while subprime foreclosure starts were 3.72 percent and new FHA filings were 0.94 percent. On a unadjusted basis, prime foreclosure starts during the fourth quarter rose to 0.68 percent from the third quarter's 0.61 percent, while subprime foreclosure starts actually fell to 3.96 percent from 4.23 percent.
Seasonally adjusted new foreclosures in Nevada were 2.65 percent, higher than any other state. No. 2 was Florida, with a 2.36 percent rate, and Arizona, at 2.07 percent.
At the other end of the spectrum was North Dakota, which saw foreclosures initiated on just 0.30 percent of its loans.
The rate of loans in foreclosure -- not seasonally adjusted -- was 3.30 percent as of Dec. 31, surging from 2.97 percent the prior quarter and 2.04 percent the prior year. Brinkmann attributed the increase to the various moratoria that are preventing foreclosures from being completed.
Prime loans had a 1.88 percent foreclosure rate, rising 30 basis points from Sep. 30, and subprime foreclosures were 13.71 percent, jumping from 12.55 percent. The rate on FHA loans was 2.43 percent, up from 2.32 percent.
Florida's foreclosure rate was highest at 8.95 percent, followed by Nevada's 6.58 percent and Arizona at 4.64 percent.
Including unadjusted delinquency of at least 30 days, which was 8.63 percent on Dec 31, 11.93 percent of all U.S. borrowers were either in default or in foreclosure at the end of 2008.