Mortgage Delinquency Rates Increase, But Foreclosure Inventory Rate Down Sharply

Washington, D.C.—The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 7.25 percent of all loans outstanding at the end of the first quarter of 2013, an increase of 16 basis points from the previous quarter, but down 15 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.

Non-seasonally adjusted delinquency rates typically decrease between the fourth and first quarters, and the delinquency rate decreased 76 basis points to 6.75 percent this quarter from 7.51 percent last quarter before accounting for the seasonal effect. On an unadjusted basis, the delinquency rate was 19 basis points lower compared to the first quarter of 2012 rate of 6.94 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 on which foreclosure actions were started during the first quarter was unchanged at 0.70 percent, the lowest level since the second quarter of 2007, and was down 26 basis points from one year ago. The percentage of loans in the foreclosure process at the end of the first quarter was 3.55 percent, the lowest level since 2008, down 19 basis points from the fourth quarter and 84 basis points lower than one year ago.

The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 6.39 percent, a decrease of 39 basis points from last quarter, and a decrease of 105 basis points from the first quarter of last year.

The combined percentage of loans at least one payment past due or in foreclosure was the lowest in over four years, decreasing to 10.30 percent on a non-seasonally adjusted basis, 95 basis points lower than last quarter and 103 basis points lower than the same quarter one year ago.

Change from last quarter (fourth quarter of 2012)

The seasonally adjusted delinquency rate decreased two basis points to 3.77 percent for prime fixed loans and decreased 40 basis points to 7.62 percent for prime ARM loans. For subprime loans, the delinquency rate increased 97 basis points to 20.12 percent for subprime fixed loans and 138 basis points to 23.72 percent for subprime ARM loans. The delinquency rates for VA loans increased by 37 basis points to 6.34 percent while the FHA delinquency rate decreased by 20 basis points to 10.97.

The percentage of loans in foreclosure, also known as the foreclosure inventory rate, decreased from last quarter to 3.55 percent. The foreclosure inventory rate for prime fixed loans decreased 12 basis points to 1.98 percent and the rate for prime ARM loans decreased 73 basis points from last quarter to 5.95 percent. For subprime loans, the rate for subprime ARM loans decreased 197 basis points to 16.27 percent and the rate for subprime fixed loans decreased 54 basis points to 8.74.  The foreclosure inventory rate for FHA loans increased 11 basis points to 3.96 while the rate for VA loans decreased 10 basis points to 1.98.

The non-seasonally adjusted foreclosure starts rate decreased three basis points for prime ARM loans to 0.94 percent, 10 basis points for subprime fixed to 1.72 percent and 55 basis points for subprime ARM loans to 2.31 percent. The foreclosure starts rate remained unchanged at 0.38 percent for prime fixed loans and 0.49 percent for VA loans while the rate increased eight basis points to 0.94 percent for FHA loans.

Change from last year (first quarter of 2012)

Given the challenges in interpreting the true seasonal effects in these data when comparing quarter to quarter changes, it is important to highlight the year over year changes of the non-seasonally adjusted results.

Compared with the first quarter of 2012, the foreclosure inventory rate decreased 61 basis points for prime fixed loans, 281 basis points for prime ARM loans, 174 basis points for subprime fixed, 528 basis points for subprime ARM loans, and 48 basis points for VA loans while increasing 13 basis points for FHA loans.

Over the past year, the non-seasonally adjusted foreclosure starts rate decreased 24 basis points for prime fixed loans, 81 basis points for prime ARM loans, 41 basis points for subprime fixed, 91 basis points for subprime ARM loans, two basis points for FHA loans and 16 basis points for VA loans.