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Subprime Leads Lates Lower as FHA Foreclosures Up

Quarterly delinquency and foreclosure rates have fallen for most types of home loans — especially subprime mortgages. But the foreclosure rate on government-insured loans worsened.

Residential loans that were at least 30 days past due or in the foreclosure inventory made up 7.39 percent of all mortgages as of the second-quarter 2015.

Total delinquency tumbled from just three months earlier, when mortgage servicers maintained a 30-day rate of 7.76 percent.

The performance statistics were reported in the
Mortgage Bankers Association’s National Delinquency Survey Q2 2015.
MBA noted that some second-quarter 2014 results were restated
in the third-quarter 2014.

Compared to the second quarter of last year, the non-current rate has improved by 114 basis points.

Excluding foreclosures, the second-quarter 2015 non-current rate included a seasonally adjusted 30-day rate of 5.30 percent — the lowest level since the second-quarter 2007.

The rate was down from 5.54 percent in the first quarter and 6.04 percent in the same quarter last year.

On just prime mortgages, the 30-day rate fell to 3.01 percent from 3.18 percent in the first quarter and 3.49 percent in the second-quarter 2014.

Subprime delinquency dropped 98 BPS to 16.62 percent and has plunged 276 BPS since the same period a year previous.

Delinquency on mortgages insured by the Federal Housing Administration improved nine BPS to 9.01 percent and was also better than 9.67 percent at the same point in 2014.

On mortgages guaranteed by the Department of Veterans Affairs, 30-day delinquency declined to 4.62 percent in the second-quarter 2015 from 5.02 percent the prior quarter and 5.25 percent in the year-earlier period.

On all loan types, 30-day delinquency excluding foreclosures was 9.47 percent in Mississippi — worse than any other state. Next was Alabama’s 7.48 percent, then 7.40 percent in Louisiana, 6.94 percent in Georgia and 6.81 percent in Indiana.

The non-current rate was 2.23 percent in North Dakota — the lowest of any state.

The U.S. foreclosure inventory rate was 2.09
percent as of June 30, 2015, improving from 2.22 percent three months earlier and 2.49 percent a year earlier.

Prime mortgages had a foreclosure rate of 1.19 percent, down from 1.32 percent the prior quarter and 1.58 percent a year prior.

Foreclosure inventory on subprime loans was 8.53 percent, lower than the previous period’s 8.96 percent and the year-earlier period’s 9.67 percent.

But on FHA-insured loans, the foreclosure rate increased four BPS from the first quarter to 2.68 percent. The FHA rate, however, was down 13 BPS from the second-quarter 2014.

A four-basis-point improvement was noted for the VA foreclosure rate, which closed out the latest period at 1.37 percent. The VA rate was down 19 BPS from the same point last year.

On all loan types, New Jersey’s 7.31 percent foreclosure rate was the highest in the country. New York’s 5.31 percent was next, then Florida’s 4.24 percent, Maine’s 3.43 percent and Washington, D.C.’s, 3.29 percent.

Wyoming had the lowest foreclosure inventory rate: 0.58 percent.

“Nearly every state in the nation reported declining foreclosure inventory rates over the second quarter, reflecting a nationwide housing market recovery and strong job market that provide opportunities for distressed loans to be resolved rather than be put into foreclosure,” MBA Vice President of Industry Analysis Marina Walsh said in an announcement.

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