by Bill McBride on 2/16/2012 10:00:00 AM
Thursday, February 16, 2012
The MBA reported that 11.96 percent of mortgage loans were either one payment delinquent or in the foreclosure process in Q4 2011 (delinquencies seasonally adjusted). This is down from 12.41 percent in Q3 2011 and is the lowest level since 2008.
From the MBA: Delinquencies and Foreclosures Decline in Latest MBA Mortgage Delinquency Survey
The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 7.58 percent of all loans outstanding as of the end of the fourth quarter of 2011, a decrease of 41 basis points from the third quarter of 2011, and a decrease of 67 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate decreased five basis points to 8.15 percent this quarter from 8.20 percent last quarter.Note: 7.58% (SA) and 4.38% equals 11.96%.
The percentage of loans on which foreclosure actions were started during the third quarter was 0.99 percent, down nine basis points from last quarter and down 28 basis points from one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the fourth quarter was 4.38 percent, down five basis points from the third quarter and 26 basis points lower than one year ago. The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 7.73 percent, a decrease of 16 basis points from last quarter, and a decrease of 87 basis points from the fourth quarter of last year.
"Mortgage performance continued to improve in the fourth quarter, reflecting the improvement we saw in the job market and broader economy. The total delinquency rate and foreclosure starts rate decreased and are back down to levels from three years ago. A major reason is that the loans that are seriously delinquent are predominantly made up of loans originated prior to 2008 and this pool is steadily growing smaller as a percent of total loans outstanding. In addition, employment is the key driver of mortgage performance and the mortgage delinquency rate is actually falling faster than the unemployment rate is declining,” said Jay Brinkmann, MBA’s Chief Economist and Senior Vice President for Research and Education.
“People often ask where we are in the housing recovery and how far we still have to go. This year-end report is a good time to take stock. By several measures, mortgage delinquencies are about half way back to long-term, pre-recession levels. The total delinquency rate peaked at 10.1 percent in the first quarter of 2010. It now stands at 7.6 percent, about half way to the longer-term pre-recession average of roughly 5 percent. The rate of foreclosure starts peaked in the third quarter of 2009 at 1.4 percent but has now dropped to 1 percent, about half way to the longer-term average of slightly under .5 percent. When it comes to real estate, however, all national measures are essentially meaningless since the important measures are local ones. This is certainly true here where the delinquency measures in some markets are much closer to their longer term averages while other markets have much further to go.
“The one exception is the percentage of loans in foreclosure which, while down somewhat at 4.4 percent, is still much closer to the all-time high of 4.6 percent reached in the fourth quarter of 2010 than the longer-term average of roughly 1.2 percent, despite the drop in delinquencies and foreclosure starts. Here the differences are clearly attributable to local conditions and legal structures. States with non-judicial foreclosure systems are seeing the backlog of foreclosures clear more rapidly and are down to an average rate of 2.8 percent. In contrast, the percentage of loans in foreclosure in the judicial system states has hit an all-time high of 6.8 percent, almost two and a half times higher than rate for non-judicial states.
I'll have more later after the conference call this morning.