Mortgage Daily Logo
mortgage news from industry experts

Subprime Delinquency Falls as FHA Rate Climbs

Subprime Delinquency Falls as FHA Rate Climbs

MBA survey indicates overall delinquency rate declines

January 12, 2004

By staff

Amidst a recovering economy, an industry report said overall national delinquencies fell further during the fourth quarter, although foreclosures increased slightly.

According to the National Delinquency Survey released Thursday by the Mortgage Bankers Association of America (MBA), the seasonally adjusted delinquency rate for one-to-four-unit residential properties dropped 16 basis points (BPS) from the third quarter to 4.49%. In the fourth quarter of 2002, the rate was 5.03%, said Doug Duncan, the group’s senior vice president, in a conference call.

According to revisions, the latest delinquency rate — derived from 37.2 million loans serviced — is at the lowest level since the second quarter in 2002, when the rate was 5.51%, said the MBA. The group reported it revised its historical delinquency rate series to make it consistent with the increased number of subprime loans now in the survey — 3.1 million, a more representative figure of the market and more than double the amount in previous quarters.

Duncan said that as the economic recovery continues, delinquency rates are declining from their post-recession peak of 5.50% in the third quarter of 2001 and that the “the combined levels of home purchases and increases in home prices are evidence of a fundamentally sound housing market.”

The highest seasonally adjusted delinquency rate was seen in FHA loans, which on a quarter-to-quarter basis rose 10 BPS to 12.23%, the Washington D.C. trade group reported. It is the first time the FHA rate is above the subprime delinquency rate, which fell from 12.69% to 11.59%. As for prime loans, the rate fell 5 BPS to 2.40%.

The percentage of loans in the process of foreclosure at the fourth quarter’s end was 1.29%, up 5 BPS from the previous quarter, yet 22 BPS below a year ago, said MBA. While FHA loans jumped the most — up 13 BPS to a new record high of 2.93%, subprime loans had a higher percentage at 5.63% and prime loans were 0.55%.

The rate of loans entering foreclosure in the fourth quarter edged up 1 BPS to 0.45%, according to the survey. Subprime loans had the highest percentage as they increased 21 BPS to 2.13%, FHA loans decreased to 0.91% and prime loans remained unchanged at 0.20%.

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...


Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts