by Bill McBride on 2/21/2013 12:47:00 PM
Thursday, February 21, 2013
A few comments from Mike Fratantoni, MBA Vice President, Single-Family Research and Policy Development, on the Q4 MBA National Delinquency Survey conference call.
• There was a significant drop in most measures of delinquencies.
• Overall delinquencies are still elevated, but the movement is in the right direction.
• Fratantoni expects that we will eventually see lower than historical delinquency rates because of the strong credit quality of recent originations. In response to a question from me, he said that he expects most deliquency measures will be back to normal in "2 to 3" years, but that it will take much longer for the foreclosure inventory to return to normal because of the backlog in judicial states. Jay Brinkmann, MBA’s Chief Economist and Senior Vice President of Research added that some measures (like the 30 delinquency rate) are already back to normal, and that some measures will take longer than others.
• The FHA is showing strong credit quality for origination in 2010, 2011 and 2012. Most of the delinquent loans are from the 2008 and 2009 vintages.
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 (12.15% in foreclosure down from 13.04% in Q3), New Jersey (8.85% down from 8.87%), New York (6.34% down from 6.46%), Illinois (6.33% down from 6.83%), and Nevada (the only non-judicial state in the top 13 at 5.87% down from 5.93%).
As Fratantoni noted, California (2.06% down from 2.63%) and Arizona (2.02% down from 2.51%) are now well below the national average by every measure.
Mike Fratantoni noted that for judicial foreclosure states, it appears foreclosure inventory peaked in Q2 2012 (foreclosure inventory is the number of mortgages in the foreclosure process). Foreclosure inventory in the judicial states has declined for two consecutive quarters. This is three years after the peak in foreclosure inventories for non-judicial states.