Thursday, February 11, 2021

MBA: "Mortgage Delinquencies Decrease in the Fourth Quarter of 2020"

by Calculated Risk on 2/11/2021 10:16:00 AM

From the MBA: Mortgage Delinquencies Decrease in the Fourth Quarter of 2020

The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 6.73 percent of all loans outstanding at the end of the fourth quarter of 2020, according to the Mortgage Bankers Association’s (MBA) latest National Delinquency Survey.

For the purposes of the survey, MBA asks servicers to report loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage. The delinquency rate was down 92 basis points from the third quarter of 2020 and up 296 basis points from one year ago. The percentage of loans on which foreclosure actions were started in the fourth quarter remained unchanged from the last two quarters at a survey low of 0.03 percent.

“For the second consecutive quarter, homeowners’ ability to make their mortgage payments improved,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “The 92-basis-point drop in the delinquency rate in the fourth quarter was the biggest quarterly decline in the history of MBA’s survey dating back to 1979. Total mortgage delinquencies across the three loan types – conventional, FHA, and VA – and across the major stages of delinquency – 30-day, 60-day, and 90-day – declined from last year’s third quarter.”
emphasis added
MBA Delinquency by PeriodClick on graph for larger image.

This graph shows the percent of loans delinquent by days past due.  Overall delinquencies decreased in Q4.

The decrease was in all the buckets.  

From the MBA:
Compared to last quarter, the seasonally adjusted mortgage delinquency rate decreased for all loans outstanding. By stage, the 30-day delinquency rate decreased 8 basis points to 1.78 percent, the lowest rate since the survey began in 1979. The 60-day delinquency rate decreased 25 basis points to 0.77 percent, and the 90-day delinquency bucket decreased 60 basis points to 4.18 percent.

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 fourth quarter was 0.56 percent, down 3 basis points from the third quarter of 2020 and 22 basis points from one year ago. This is the lowest foreclosure inventory rate since the second quarter of 1982.
This sharp increase last year in the 90-day bucket was due to loans in forbearance (included as delinquent, but not reported to the credit bureaus).

The percent of loans in the foreclosure process declined further, and was at the lowest level since 1982.