90-Day Accounts Drive Rise in Mortgage Delinquency

According to the survey, the seasonally adjusted delinquency rate for mortgages on one-to-four-unit residential properties rose ten basis points from the first quarter to 4.62%. A year ago the rate was 4.77%.

“Despite a very healthy housing market in most of the country, the overall economy remained weak, though growing, in the second quarter,” said the group’s chief economist Doug Duncan, in the announcement. “The trends of record consumer bankruptcies and significant job losses, along with war-related business uncertainties and related rising energy prices, prevented a robust improvement in the performance of the mortgage portfolio.”

Duncan added that early indicators point to an improving economy and jobs market in the third-quarter.

On a seasonally adjusted basis, loans delinquent 90 days or more rose from 0.76% at the end of the first quarter to 0.84% at the end of the second quarter, an MBA spokesman said. The eight basis point jump for the category was the driving factor in the overall delinquency, according to the survey.

A small sample of conventional subprime loans showed delinquency in that category rose 59 basis points to 12.99%, while FHA loan delinquency soared 94 basis points to 12.59% and VA loans jumped 35 basis points to 8.24%. Total conventional loan delinquency was up just 4 basis points to 3.14%.

Loans in the process of foreclosure — which are not included in the overall delinquency figure — fell 8 basis points to 1.12%.

Record origination levels during the past year have left many of the country’s mortgages without seasoning. As the recently-originated mortgages age, delinquency levels can tend to rise — but without the benefit of offsetting new record-level loan originations.