MBA: Seasonal Adjustments Erase Actual Mortgage Delinquency Improvements
Although seasonal adjustments increased the 1st quarter 2012 delinquency rate, non-seasonally adjusted mortgage delinquencies continue to decrease in several categories, according to the Mortgage Bankers Association’s National Delinquency Survey released Thursday.
The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 7.25% of all loans outstanding at the end of the 1st quarter of 2013, a 16 basis points increase from 4th quarter 2012, the MBA said.
However, the non-seasonally adjusted rate decreased 76 basis points from 4th quarter 2012 to 6.75%. The MBA said a decrease in the 1st quarter is typical.
“On a seasonally adjusted basis, the overall delinquency rate increased this quarter, driven by a slight increase in the 30-day delinquency rate,” said Michael Fratantoni, MBA’s vice president of research and economics.
“Normal seasonal patterns are beginning to re-emerge, but as has been true post-crisis, it is still difficult to parse typical seasonal swings from true changes in performance,” Fratantoni said.
“It is also important to note the decline relative to last year at this time. Regardless, we remain in a period of slow and uneven economic and job growth in the U.S. and there are still many borrowers without stable, full time employment, or that are still unemployed,” he said.
The MBA economist said that on a seasonally adjusted basis the largest increases in delinquency were in the subprime fixed and ARM categories, “typically sensitive to income and payment shocks, and likely even more so in the current economic environment.”
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 1st quarter was unchanged at 0.70%, the lowest level since the 2nd quarter of 2007, and was down 26 basis points from one year ago, the MBA said.
The percentage of loans in the foreclosure process at the end of the 1st quarter was 3.55%, the lowest level since 2008, down 19 basis points from the 4th quarter.
The serious delinquency rate, representing loans that are 90 days or more past due or in the process of foreclosure, was 6.39%, a decrease of 39 basis points from last quarter.
The combined percentage of loans at least one payment past due or in foreclosure was the lowest in more than four years, decreasing to 10.30% on a non-seasonally adjusted basis, 95 basis points lower than last quarter, the MBA said.
“We are seeing substantial improvements in the foreclosure situation nationally and in many states. The foreclosure inventory measure decreased in 40 states, with states like Florida, California, and Nevada leading the declines,” Fratantoni said.
“States with a judicial foreclosure system continue to bear a disproportionate share of the foreclosure backlog,” he said.
While the average percentages of loans in foreclosure dropped in both states with judicial systems and states with non-judicial systems, the average rate for judicial states was 5.96%, triple the average rate of 1.99% for non-judicial states, the MBA economist said.