05/16/2012 By: Esther Cho, DSNews.com
On a national level, delinquency rates and foreclosure starts decreased on a quarterly and yearly basis in the first quarter of 2012, with foreclosure inventory the exception, which increased slightly compared to the previous quarter, according to first quarter 2012 delinquency survey results released by the Mortgage Bankers Association (MBA).
The delinquency rate was 7.40 percent on a seasonally adjusted basis in the first quarter of 2012 compared to the 2011 fourth quarter rate of 7.58 percent and the year ago quarter’s 8.32 percent. On a non-seasonally adjusted basis, the delinquency rate saw an even greater decrease at 6.94 percent compared to the previous quarter’s 8.15 percent and 7.79 percent a year ago.
“Mortgage delinquencies normally fall during the first quarter of the year, but the declines we saw were even greater than the normal seasonal adjustments would predict, so delinquencies are clearly continuing to improve,” said Michael Fratantoni, MBA’s VP of research and economics.
Loans in the 30-day bucket had a rate of 3.13 percent, 60-plus delinquencies had a rate of 1.21 percent, and those 90 days or more past due had a rate of 3.06 percent. Of those stages, loans 30 days past due saw the greatest quarterly decrease, dropping 9 basis points, while loans 90 days or more delinquent had the greatest yearly decrease, falling 56 basis points.
The rate of loans in the seriously delinquent category, which includes 90-plus loans and foreclosures, was 7.44 percent, a quarterly and yearly drop of 29 and 66 basis points, respectively.
Fratantoni added that as of March 31, the percentage of loans one payment past due is down to the lowest level since the middle of 2007, and loans three payments or more past due dropped to the lowest level since the end of 2008. Also, foreclosure starts are at their lowest level since the end of 2007.
Foreclosure inventory, on the other hand, saw a small quarterly increase of 1 basis point after ending at 4.39 percent in the 2012 first quarter. Last year, foreclosure inventory was 4.52 percent, down by 13 basis points compared to this quarter.
Fratantoni explained what underlying trends are occurring to cause the increase.
“First, the percentage of loans in foreclosure is up for prime and FHA loans. The percentage of subprime loans in foreclosure continues to fall as the subprime loans age and the problem loans are resolved one way or the other. However, the percentages of loans in foreclosure for both FHA loans and prime fixed-rate loans are climbing and are just below all-time records,” he said.
According to data from MBA, 60 percent of loans in the seriously delinquent stage were originated between 2005-2007.
Foreclosure inventory in judicial states also continues to be a problem, with the percentage of loans in foreclosure inventory in judicial states at 6.88 percent compared to only 2.77 percent in non-judicial states.
Fratantoni pointed out that the foreclosure start rate is essentially the same in both types of states, with the difference in foreclosure inventory being due entirely to the systems some states have in place that block timely resolution of non-performing loans.
The national average for foreclosure inventory was 4.39 percent, and in non-judicial states, only Nevada was above the average at 6.47 percent, while in judicial states, about half, or 10 states, were above the average.
The five states with the highest share of loans in foreclosure inventory – Florida, California, Illinois, New York, and New Jersey – make up 52.4 percent of the total.
As for delinquencies in individual states, Fratantoni said the improvement in loan performance was widespread, with only four states – Maryland, Delaware, New Jersey and Washington – experiencing increases in their 90-plus day delinquency rates.
He further added that 41 states saw decreases in foreclosure starts and 22 states experienced declines in the percentage of loans in foreclosure.
MBA’s survey includes 42.8 million loans on one-to-four-unit residential properties, representing approximately 88 percent of all “first-lien” residential mortgage loans outstanding in the United States.
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