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Friday, November 18, 2011

Mortgage Delinquencies by Loan Type

by Calculated Risk on 11/18/2011 01:30:00 PM

By request, the following graphs show the percent of loans delinquent by loan type: Prime, Subprime, FHA and VA. First a table comparing the number of loans in 2007 and Q3 2011 so readers can understand the shift in loan types.

Both the number of prime and subprime loans have declined over the last four years; the number of subprime loans is down by about one-third. Meanwhile the number of FHA loans has increased sharply.

Note: There are about 50 million total first-lien loans - the MBA survey is about 88% of the total.

MBA National Delinquency Survey Loan Count
Q2 2007Q3 2011ChangeQ3 2011 Seriously
Survey Total44,248,02943,526,357-721,6723,431,256

MBA Delinquency by Period Click on graph for larger image in graph gallery.

First a repeat: This graph shows the percent of loans delinquent by days past due. Loans 30 days delinquent decreased to 3.19% from 3.46% in Q2. This is the lowest level since early 2007.

Delinquent loans in the 60 day bucket decreased slightly to 1.30% from 1.37% last quarter. This is the lowest level since Q1 2008. There was a decrease in the 90+ day delinquent bucket too. This decreased to 3.50% from 3.61% in Q2 2011. This is the lowest level since 2008. This decrease was probably due to the pickup in foreclosure actions.

The percent of loans in the foreclosure process was unchanged at 4.43%.

Note: Scale changes for each of the following graphs.

Prime Mortgage Loans DelinquentThe second graph is for all prime loans.

This is the key category now ("We are all subprime!", Tanta).

Since there are far more prime loans than any other category (see table above), about half the loans seriously delinquent now are prime loans - even though the overall delinquency rate is lower than other loan types.

Subprime Mortgage Loans DelinquentThis graph is for subprime. This category gets most of the attention - mostly because of all the terrible loans made through the Wall Street "originate-to-distribute" model and sold as Private Label Securities (PLS). Not all PLS was subprime, but the worst of the worst loans were packaged in PLS.

Although the delinquency rate is still very high, the number of subprime loans had declined sharply.

FHA Mortgage Loans DelinquentThis graph is for FHA loans. The delinquency rate decreased in Q3 and has mostly been declining the last couple years. Some of the decline is because most of the FHA loans were made in the last few years, not in the 2004 to 2006 period like subprime.

Another reason for the improvement was eliminating Downpayment Assistance Programs (DAPs). These were programs that allowed the seller to give the buyer the downpayment through a 3rd party "charity" (for a fee of course). The buyer had no money in the house and the default rates were absolutely horrible. HUD mentioned this in the annual review of the FHA financial status.

VA Mortgage Loans DelinquentThe last graph is for VA loans.

All four categories saw a decrease in overall delinquencies Q3.

There are still quite a few subprime loans that are in distress, but the real keys going forward are prime loans and FHA loans.

All current mortgage delinquency graphs.