by Bill McBride on 8/13/2015 10:55:00 AM
Thursday, August 13, 2015
The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 5.30 percent of all loans outstanding at the end of the second quarter of 2015. This was the lowest level since the second quarter of 2007. The delinquency rate decreased 24 basis points from the previous quarter, and 74 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey.Click on graph for larger image.
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 second quarter was 2.09 percent, down 13 basis points from the first quarter and 40 basis points lower than the same quarter one year ago. This was the lowest foreclosure inventory rate since the fourth quarter of 2007.
Marina Walsh, MBA's Vice President of Industry Analysis, offered the following commentary on the survey:
"Overall delinquency rates and the percentage of loans in foreclosure continued to fall in the second quarter and are at their lowest levels since 2007. Even more telling, nearly every state in the nation reported declining foreclosure inventory rates over the second quarter, reflecting a nationwide housing market recovery and strong job market that provide opportunities for distressed loans to be resolved rather than be put into foreclosure.
"As has been the case since the fourth quarter of 2012, New Jersey, New York, and Florida had the highest percentage of loans in foreclosure in the nation. ... "Legacy loans continued to account for the majority of all troubled mortgages. 73 percent of the loans that were seriously delinquent, either more than 90 days delinquent or in the foreclosure process were originated before 2008, even as the overall rate of serious delinquencies for those cohorts decreased."
This graph shows the percent of loans delinquent by days past due.
The percent of loans 30 and 60 days delinquent are back to normal levels.
The 90 day bucket peaked in Q1 2010, and is about 78% of the way back to normal.
The percent of loans in the foreclosure process also peaked in 2010 and and is about 75% of the way back to normal.
So it has taken over 5 years to reduce the backlog of seriously delinquent and in-foreclosure loans by over 75%, so a rough guess is that serious delinquencies and foreclosure inventory will be back to normal near the end of 2016. Most other mortgage measures are already back to normal, but the lenders are still working through the backlog of bubble legacy loans.
Posted by Bill McBride on 8/13/2015 10:55:00 AM