The Mortgage Bankers Association (MBA) said today that the mortgage delinquency rate for one- to four-unit residential properties was down to a seasonally adjusted rate of 4.71% of all loans outstanding at the end of the first quarter of 2017. The delinquency rate was down nine basis points from the previous quarter and was six basis points lower than this same time period last year.

Mortgages in the first quarter with foreclosure actions started were on the rise by two basis points from the previous quarter to 0.30%, but five basis points lower than one year ago.

The MBA said that the number of loans at some stage of the foreclosure process was 1.39% of total mortgages at the end of the first quarter, a decrease of 14 basis points from the fourth quarter and 35 basis points lower than one year ago.

Mortgages that were in serious delinquency (loans that are 90 days or more past due or in the process of foreclosure), was 2.76%, a decrease of 37 basis points from last quarter, and a decrease of 53 basis points from last year.

Marina Walsh, MBA’s Vice President of Industry Analysis, had issued this statement on the survey:

“Mortgage delinquencies decreased overall in the first quarter of 2017, driven by a drop in both the FHA and VA delinquency rates from the previous quarter as the conventional delinquency rate held constant. Employment growth started 2017 on strong footing, with the economy adding 216,000 jobs in January 2017 and 232,000 jobs in February. Average hourly wage growth increased 2.8 percent over the year, and has maintained a generally increasing trend since late 2015. These fundamentals have helped to support the performance of all loan types – whether FHA, VA or conventional loans.

“Last quarter’s increase in FHA delinquencies was reversed in the first quarter of 2017. The seasonally-adjusted FHA delinquency rate decreased to 8.09 percent from 9.02 percent in the fourth quarter, reaching its lowest level since 1997. Typically, in the fourth quarter of any given year, we see a rise in delinquencies because of higher heating costs and holiday spending. This increase is usually reversed in the first quarter. While MBA uses a seasonal adjustment model to mitigate these predictable seasonal effects, this particular 6 month period showed larger than expected swings. First quarter results indicate that the increase in FHA delinquencies that we saw in the last quarter of 2016 has not been established as an ongoing trend.

“Additionally, the VA delinquency rate dropped to 3.90 percent from 4.00 percent in the fourth quarter. The conventional delinquency rate held steady at 4.04 percent.

“We saw an increase in foreclosure starts for the first time since the fourth quarter of 2014, but this increase was accompanied by a sizable drop in loans that were 90 days or more past due. It is likely that legacy distressed loans were held in the late stage-delinquency bucket by factors such as resolution attempts and state-specific requirements, before eventually going into foreclosure status. All 50 states and the District of Columbia saw a decrease in the 90-day or more delinquency rate.

“In addition, nearly all states had a decrease in the percentage of loans in foreclosure in the first quarter. The overall percentage of loans in the process of foreclosure was 1.39 percent, its lowest level since the first quarter of 2007. While judicial states still had more than three times the percent of loans in foreclosure as non-judicial states, that measure declined to the lowest level since the fourth quarter of 2007.”

Erik Sandstrom
LoanSafe's Mortgage Expert
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