Mortgage Delinquencies Reach Pre-Housing Crisis Levels: MBA

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Mortgage loan delinquency rates through the third quarter fell to their lowest levels in seven years, according to data from the Mortgage Bankers Association.

The delinquency rate for mortgage loans on one-to-four unit residential properties decreased to a seasonally adjusted rate of 5.85% of all loans outstanding at the end of the third quarter. This figure is down 56 basis points from a year earlier, the Washington-based trade group said.

The percentage of loans in the foreclosure process at the end of the third quarter was 2.39%, which is a 69 basis point drop from a year ago. This represents the lowest foreclosure rate since the fourth quarter of 2007.

Loans that are 90 or more days past due or in the foreclosure process were down year-over-year by 100 basis points, to 4.65%. Nearly three-fourths of these loans were originated in 2007 or earlier, according to the MBA. Meanwhile, loans made in recent years are “performing well” due to tight credit conditions, said Mike Fratantoni, chief economist for the Mortgage Bankers Association, as this group accounts for only 4% of all seriously delinquent loans.

Furthermore, foreclosure starts remained unchanged on a seasonally adjusted basis, the MBA survey revealed, with subprime loans accounting for 33% of new foreclosures that began in the third quarter. However, on an unadjusted basis, foreclosure starts were up four basis points, to 0.44%.

Judicial states have a combined foreclosure inventory rate that is approximately three times larger than nonjudicial states, the MBA said.

“We are now back to pre-crisis levels for most measures,” Fratantoni said. “Given the continued decline in delinquency and foreclosure inventory rates, we expect that the increase in the unadjusted starts rate is just regular seasonal fluctuation.”

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