by Bill McBride on 3/25/2015 09:33:00 AM
Wednesday, March 25, 2015
Freddie Mac reported that the Single-Family serious delinquency rate declined in February to 1.81%, down from 1.86% in January. Freddie's rate is down from 2.29% in February 2014, and the rate in February was the lowest level since December 2008. Freddie's serious delinquency rate peaked in February 2010 at 4.20%.
These are mortgage loans that are "three monthly payments or more past due or in foreclosure".
Note: Fannie Mae will report their Single-Family Serious Delinquency rate for February next week.
Click on graph for larger image
Although the rate is declining, the "normal" serious delinquency rate is under 1%.
The serious delinquency rate has fallen 0.48 percentage points over the last year - and the rate of improvement has slowed recently - but at that rate of improvement, the serious delinquency rate will not be below 1% until late 2016.
Note: Very few seriously delinquent loans cure with the owner making up back payments - most of the reduction in the serious delinquency rate is from foreclosures, short sales, and modifications.
So even though distressed sales are declining, I expect an above normal level of Fannie and Freddie distressed sales for 2 more years (mostly in judicial foreclosure states).