Recent data from the Mortgage Bankers Association suggests that even as the housing finance system struggles to process the millions of distressed properties across the country, the number of properties in danger of entering that process is shrinking.
The seasonally adjusted delinquency rate for mortgage loans on one-to-four-unit residential properties fell to 7.99% in the third quarter of 2011, according to data from the MBA's National Delinquency Survey. This is the lowest level recorded since the fourth quarter of 2008, the association said.
This even as the numbers of foreclosed properties continued to rise.
“While the delinquency picture changed for the better in the third quarter, the foreclosure data indicated that we are not out of the woods yet and that the issues continue to vary by geography,” said Michael Fratantoni, MBA’s vice president of research and economics. “A closer look shows that there are different trends driving these results. The increase in the foreclosure starts rate this quarter was driven by large increases from just a few servicers, concentrated in certain ‘hardest hit’ states,” Fratantoni said.
“For most servicers, the foreclosure starts rate was little changed over the quarter. In these hardest-hit states, the few large changes reflect the progression of delinquent loans through the foreclosure process. Outside of these states, improvement has continued, although at a slow pace due to the still-weak job market,” he said.
Fratantoni reported that the 30-day delinquency rate, the measure of early stage delinquency, reached its lowest level since the second quarter of 2007, a sign, he said, that new mortgage delinquencies have slowed.
Foreclosure starts, however, increased this quarter after declining for three straight quarters and is now back up to the levels of the first quarter of 2011.