by Bill McBride on 5/16/2012 11:19:00 AM
Wednesday, May 16, 2012
A few comments from Jay Brinkmann, MBA’s Chief Economist and Senior Vice President for Research and Education, and Michael Fratantoni, MBA's Vice President, Vice President of Research and Economics, on the conference call.
• All delinquency categories were down in Q1, both seasonally adjusted (SA) and NSA.
• The 30 day delinquency rate is back to normal (at the long term average). (This means a normal amount of loans are going delinquent each month)
• This was the largest quarter-to-quarter drop in delinquencies in history (there is usually a large seasonal drop in Q1, but this was larger than normal).
• The biggest problem is the number of loans in the foreclosure process. This is primarily a problem in states with a judicial foreclosure process. States like California and Arizona are now below the national average of percent of loans in the foreclosure process.
Click on graph for larger image in graph gallery.
This graph is from the MBA and shows the percent of loans in the foreclosure process by state. Posted with permission.
The top states are Florida (14.31% in foreclosure), New Jersey (8.37%), Illinois (7.46%), Nevada (the only non-judicial state in the top 10 at 6.47%), and New York (6.17%).
As Jay Brinkmann noted, California (3.29%) and Arizona (3.57%) are now below the national average and improving quickly.
The second graph shows the percent of loans delinquent by days past due.
Loans 30 days delinquent decreased to 3.13% from 3.22% in Q4. This is at about 2007 levels and around the long term average.
Delinquent loans in the 60 day bucket decreased to 1.21% in Q1, from 1.25% in Q4. This is the lowest level since Q4 2007.
There was a decrease in the 90+ day delinquent bucket too. This decreased to 3.06% from 3.11% in Q4 2011. This is the lowest level since 2008, but still way above normal (around 0.8% would be normal according to the MBA).
The percent of loans in the foreclosure process increased slightly to 4.39% from 4.38%.
A final comment: I asked about the impact of the mortgage settlement (signed on April 5th, after Q1 ended). Jay Brinkmann said that servicers might have been waiting for the settlement and that might have "built up" the in-foreclosure rate in Q1. The two key categories to watch for the impact of the settlement are the in-foreclosure and 90+ days delinquent buckets.
To reiterate: the key problem remains the very high level of seriously delinquent loans and loans in the foreclosure process.
Note: the MBA's National Delinquency Survey (NDS) covers about "42.8 million first-lien mortgages on one- to four-unit residential properties" and is "estimated to cover around 88 percent of the outstanding first-lien mortgages in the market." This gives about 5.7 million loans delinquent or in the foreclosure process.