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Continued Improvement in Mortgage Performance Metrics

Total delinquency rate down 24 BPS in Q4

Feb. 20, 2014

By Mortgage Daily staff

It's been six years since the rate of past-due payments on home loans has been this low, while it's been nearly as long since the foreclosure rate has been this favorable. But on just government-insured mortgages, delinquency moved higher.

Borrowers who were at least 30 days past due or in the process of foreclosure accounted for 9.25 percent of all outstanding home loans as of the end of 2013.

Delinquency retreated from Sept. 30, 2013, when the 30-day rate was 9.49 percent.

An even bigger improvement has been made since Dec. 31, 2012, when the rate of late payments was 10.83 percent.

On just the prime portion of the U.S. book of business, 30-day delinquency, including foreclosures, was 5.34 percent. Prime delinquency fell from 5.75 percent at the end of the third quarter and 6.97 percent at the end of the fourth-quarter 2012.

Subprime delinquency was 31.25 percent, off from 31.34 percent as of Sept. 30 and better than 32.23 percent as of Dec. 31, 2012.

The only category to experience deterioration from the third quarter was Federal Housing Administration loans, with the 30-day rate rising to 13.74 percent from 13.42 percent. Still, delinquency on FHA-insured loans was lower than the 15.02 percent rate in place at the end of 2012.

Delinquency fell to 7.07 percent from 7.22 percent on mortgages guaranteed by the Department of Veterans Affairs. The VA delinquency rate was also better than 8.05 percent as of a year earlier.

Reflected in the Dec. 30, 2013, total U.S. rate was a seasonally adjusted 30-day rate, excluding foreclosures, of 6.39 percent. That was the lowest delinquency rate since the first-quarter 2008, when it was 6.35 percent.

Thirty-day delinquency was 6.41 percent at the end of the third quarter and 7.09 percent at the end of 2012.

The trade group, which is hosting its annual servicing conference in Orlando, Fla., noted that mortgages originated in 2009 and earlier accounted for more than 90 percent of loans past due at least 90 days.

"This is important to note because current home prices, while still rising, are about 9 percent below the peak in 2007," MBA Chief Economist Michael Fratantoni said in the report. "Therefore, borrowers with loans originated in 2007 will be more vulnerable to traditional delinquency and foreclosure trigger events such as a divorce, job loss, health issue, or death in the household."

Mississippi had the highest 30-day rate excluding foreclosures: 11.52 percent..

Alabama followed with a 9.05 percent rate, then Louisiana's 9.04 percent, Georgia's 8.94 percent and Indiana's 8.72 percent.

North Dakota had the lowest rate in this category: 2.61 percent.

Also included in the total U.S. delinquency number was a 2.86 percent foreclosure inventory rate -- the lowest since the second-quarter 2008's 2.75 percent. The foreclosure rate was not seasonally adjusted.

The foreclosure rate was 3.08 percent three months earlier and 3.74 percent a year earlier.

At 8.56 percent, Florida had the highest foreclosure inventory rate.

Next was New Jersey's 7.90 percent. After that was 6.24 percent in New York, 5.00 percent in Maine and 4.49 percent in Connecticut.

The lowest foreclosure rate was in Wyoming at 0.63 percent.

"States with judicial foreclosure systems still accounted for most of the loans in foreclosure," the report stated. "Of the 17 states that had a higher foreclosure inventory rate than the national average, 15 of those were judicial states."

MBA said that the average foreclosure rate in judicial states was 4.92 percent versus just 1.52 percent for non-judicial states.

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