Mortgage Delinquency Rates Fall to 6-Year Low

Americans are keeping up with their mortgages on a widespread level, with delinquencies falling to more-than-six year lows in the latest quarter, according to a new report from the Mortgage Bankers Association.

The U.S. mortgage delinquency rate fell to a seasonally adjusted 6.04 percent in the second quarter of 2014, down from 6.11 percent in the first quarter and down from 6.96 percent a year earlier. The delinquency rate includes residential properties with between one to four units that are at least one payment behind but not yet in the foreclosure process. This is the fifth straight quarter of delinquency declines and it is the lowest level since the last quarter of 2007.

Properties within the foreclosure process made up 2.49 percent in the second quarter, a decrease from 2.65 in the first quarter and 3.33 percent in the 2013 second quarter. Foreclosure rates have not been that low since the first quarter of 2008.

“Delinquency and foreclosure rates fell to their lowest levels in more than six years, and the rate of new foreclosure starts is at its lowest level since 2006,” said Mike Fratantoni, MBA’s Chief Economist in a statement. “Strong job growth and continued increases in home prices in most markets have been the main contributors to these steady improvements in mortgage performance.

Another positive sign is that new properties entering the foreclosure process fell as well in the second quarter. New foreclosure starts dropped to 0.40 percent from 0.45 percent in the first quarter, the lowest percentage since the second quarter of 2006, even before the mortgage meltdown.

Also the percentage of delinquent new adjustable rate mortgages (ARMs) is improving. Only the pre-housing bust loans seem to be getting behind on payments. “A new trend that has emerged is growth in the number of prime ARM loans serviced,” said Fratatoni. “… A majority of outstanding prime ARM loans were originated in 2007 and earlier and these loan vintages accounted for over 90 percent of seriously delinquent prime ARM loans. These older cohorts are keeping the seriously delinquent numbers elevated despite the inflow of newer loans with stronger credit quality.”

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on August 7th 2014 in Mortgage News

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