Residential Mortgage Delinquencies and Foreclosures Down From Last Year, According to MBA National Delinquency Survey
December 10, 2004
WASHINGTON, D.C. (December 9, 2004) – The third-quarter 2004 National Delinquency Survey (NDS) released today by the Mortgage Bankers Association (MBA) shows that the seasonally adjusted (SA) delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 4.41 percent at the end of the third quarter, down 24 basis points from the same quarter last year and down 2 basis points from the second quarter of this year.
The inventory of loans in foreclosure was 1.14 percent at the end of the third quarter, a drop of 10 basis points from the same quarter last year and a drop of 2 basis points from the second quarter of this year. This rate was the lowest level since the third quarter of 2000. The SA rate of loans entering the foreclosure process was 0.39 percent in the third quarter, down 5 basis points from the same quarter last year and unchanged from the second quarter of 2004.
"The performance of delinquencies and foreclosures is improving as expected," said Doug Duncan, MBA's chief economist and senior vice president. "The continued modest declines in both delinquencies and foreclosures reflect the strong pace of economic growth and its steady, modest job creation. These improvements override the effects of the increased subprime and ARM [adjustable-rate mortgage] shares and the aging of the young mortgage portfolio. We expect this trend of modestly declining delinquencies and foreclosures to continue."
The seasonally adjusted delinquency rates decreased for all loan types over the last year. Since the third quarter of 2003, the SA delinquency rate has decreased 12 basis points for prime loans (from 2.44 percent to 2.32 percent), 135 basis points for subprime loans (from 11.74 percent to 10.39 percent), 13 basis points for Federal Housing Administration (FHA) loans (from 12.35 percent to 12.22 percent) and 61 basis points for Department of Veterans Affairs (VA) loans (from 7.89 percent to 7.28 percent).
Compared with the second quarter of 2004, the SA delinquency rates fell for most loan types during the third quarter: 8 basis points for prime loans, 30 basis points for FHA loans and 27 basis points for VA loans. Among subprime loans, the delinquency rate rose 35 basis points. As compared with last year, the foreclosure inventory percentage dropped for prime and subprime loans but increased slightly for FHA and VA loans.
On a year-over-year basis, the foreclosure inventory percentage decreased 5 basis points for prime loans (from 0.53 percent to 0.48 percent) and 167 basis points for subprime loans (from 5.74 percent to 4.07 percent), but increased 2 basis points for FHA loans (from 2.82 percent to 2.84 percent) and 5 basis points for VA loans (from 1.55 percent to 1.60 percent).
The SA percentage of new foreclosures has decreased for most loan types over the last year. Compared with the third quarter of 2003, the SA percentage of new foreclosures has decreased 2 basis points for prime loans (from 0.20 percent to 0.18 percent), 2 basis points for FHA loans (from 1.00 percent to 0.98 percent) and 32 basis points for subprime loans (from 1.68 percent to 1.36 percent), while increasing 1 basis point for VA loans (from 0.50 percent to 0.51 percent).
Since last quarter, the SA percentage of new foreclosures decreased 1 basis point for prime loans but increased 18 basis points for subprime loans, 3 basis points for FHA loans and 1 basis point for VA loans.