According to the Mortgage Bankers Association's National Delinquency Survey, the delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 4.99 percent of all loans outstanding at the end of the third quarter of 2015. This was the lowest level since the first quarter of 2007. The delinquency rate decreased 31 basis points from the previous quarter, and 86 basis points from one year ago.
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 in the foreclosure process at the end of the third quarter was 1.88 percent, down 21 basis points from the second quarter and 51 basis points lower than one year ago. This was the lowest foreclosure inventory rate seen since the third quarter of 2007.
The percentage of loans on which foreclosure actions were started during the third quarter was 0.38 percent, a decrease of two basis points from the previous quarter, and down six basis points from one year ago. The foreclosure starts rate is at the lowest level since the second quarter of 2005.
The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 3.57 percent, a decrease of 38 basis points from last quarter, and a decrease of 108 basis points from last year. This was the lowest serious delinquency rate since the third quarter of 2007.
Marina Walsh, MBA's Vice President of Industry Analysis, offered the following commentary on the survey:
"Overall delinquency rates and the percentage of loans in foreclosure continued to fall in the third quarter and are at their lowest levels since the first quarter of 2007. The serious delinquency rate - measured by those loans that are 90 days or more delinquent or in the process of foreclosure - declined for nearly every state in the nation. The factors influencing this outcome include a nationwide housing market recovery, resolution of long-standing troubled loans that eventually proceeded through the foreclosure process, and an improving employment outlook that provided distressed borrowers viable alternatives to foreclosure.
"The overall delinquency rate for FHA loans dropped to 8.91 percent in the third quarter from 9.01 percent in the second quarter, as the 90 day or more delinquent category declined by 20 basis points and more than offset an 11 basis point increase in the 30 day delinquency rate. In addition, the FHA foreclosure inventory rate dropped to 2.65 percent in the third quarter, from 2.68 percent in the second quarter and 2.73 percent a year ago.
"While only 40 percent of loans serviced are in judicial states, these states account for a majority of loans in foreclosure. For states where the judicial process is more frequently used, 3.01 percent of loans serviced were in the foreclosure process, compared to 1.06 percent in non-judicial states. States that utilize both judicial and non-judicial foreclosure processes had a foreclosure inventory rate closer that of the non-judicial states at 1.26 percent.
"As has been the case since the fourth quarter of 2012, New Jersey, New York, and Florida had the highest percentage of loans in foreclosure in the nation. All three of these states primarily use a judicial foreclosure process.
"New Jersey's foreclosure inventory rate remained the highest in the nation at 6.47 percent. But its 84 basis point decline in the foreclosure inventory rate was the largest decline experienced by any state in the third quarter, and the second largest decline reported for New Jersey in any quarter.
"New York's foreclosure inventory rate dropped to 4.77 percent in the third quarter, from 5.31 percent in the second quarter. This 54 basis point decline in the foreclosure inventory rate in the third quarter was the largest decline reported for New York in any quarter.
"Florida's foreclosure inventory rate dropped to 3.46 percent in the third quarter, from 4.24 percent in the second quarter, a decline of 78 basis points. While this decline was substantial, Florida experienced its largest decline in the foreclosure inventory rate - 110 basis points - two years earlier in the third quarter of 2013.
"Legacy loans continued to account for the majority of all troubled mortgages. Across all loans, 80 percent of the loans that were seriously delinquent were originated before the year 2009, even as the overall rate of serious delinquencies for those cohorts decreased."