by Calculated Risk on 8/11/2022 10:45:00 AM
The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 3.64 percent of all loans outstanding at the end of the second quarter of 2022, according to the Mortgage Bankers Association’s (MBA) 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 47 basis points from the first quarter of 2022 and down 183 basis points from one year ago.
“At 3.64 percent, the mortgage delinquency rate in the second quarter fell to its lowest level since MBA’s survey began in 1979 – even beating out the previous pre-pandemic, survey low of 3.77 percent in the fourth quarter of 2019,” said Marina Walsh, MBA’s Vice President of Industry Analysis. “Most of the improvement across all product types – FHA, VA, and conventional loans – resulted from a decline in the loans that were 90 days or more delinquent but not in the foreclosure process.”
According to Walsh, of all the economic indicators that can lead to mortgage delinquencies, the U.S. unemployment rate seems to be the best gauge of loan performance. Despite inflationary pressures, stock market volatility, increases in mortgage rates, and two quarters of economic contraction – often defined as a recession – the job market remains incredibly strong. The unemployment rate was 3.5 percent in July – a half-century low that tracks closely with the record-low mortgage delinquency rate.
Added Walsh, “Foreclosure inventory levels and foreclosure starts remain well below historical averages for the survey – a strong indication that servicers are able to help delinquent borrowers find alternatives to foreclosure. Such alternatives include curing, loan workouts, home sales – with possible equity to spare, or cash-for-keys and deed-in-lieu options.”
This graph shows the percent of loans delinquent by days past due. Overall delinquencies decreased in Q2 to a record low.
From the MBA:
Compared to last quarter, the seasonally adjusted mortgage delinquency rate decreased for all loans outstanding to 3.64 percent, the lowest level in the history of the survey dating back to 1979. By stage, the 30-day delinquency rate increased 7 basis points to 1.66 percent, the 60-day delinquency rate decreased 7 basis points to 0.49 percent, and the 90-day delinquency bucket decreased 47 basis points to 1.49 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 second quarter was 0.59 percent, up 6 basis points from the first quarter of 2022 and 8 basis points higher than one year ago. The foreclosure inventory rate remains below the quarterly average of 1.43 percent dating back to 1979.
This sharp increase in 2020 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 increased in Q1 with the end of the foreclosure moratoriums.
Image and article originally from www.calculatedriskblog.com. Read the original article here.