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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 62 December 2023 J O U R N A L MORTGAGE DELINQUENCY RATE INCREASES ACROSS YOY, QUARTERLY TIME FRAMES W ith the labor market having shown recent signs of weak- ening, and the unemploy- ment rate rising to 3.9% in October, the Mortgage Bankers Association's (MBA) latest National Delinquency Survey has found that the delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.62% of all loans outstanding at the end of the third quarter of 2023. The delinquency rate was up 25 basis points from Q2 2023 and up 17 basis points year over year in Q3. The percent- age of loans on which foreclosure actions were started in Q3 rose by just one basis point to 0.14%. "The national mortgage delinquen- cy rate increased in the third quarter from the record survey low reached in the second quarter of this year, with an uptick in delinquencies across all loan types—conventional, FHA, and VA," said Marina B. Walsh, CMB, MBA's VP of Industry Analysis. "The increase was driven entirely by a rise in earliest-stage delinquencies—those 30-days and 60-days past due. Later-stage delinquen- cies—those 90 days or more past due— declined to the lowest level since the first quarter of 2020." Mortgage delinquencies and em- ployment conditions continue to track very closely, according to Walsh, as the Default Servicing Bureau of Labor Statistics (BLS) reported that unemployment rates were higher in September than a year earlier in 231 of the 389 metropolitan areas polled, lower in 131 areas, and unchanged in 27 areas. The BLS also reported that a total of 10 areas had jobless rates of less than 2% and four areas had rates of at least 8%. Nonfarm payroll employment increased over the year in 64 metropolitan areas, decreased in just one area, and was essentially unchanged in 324 areas. The national unemployment rate in Septem- ber was 3.6%, not seasonally adjusted, up from 3.3% a year earlier. MBA forecasts slower hiring and rising unemployment, with the unem- ployment rate rising to 5% by the end of 2024. "The increase in unemployment will likely mean further increases in mort- gage delinquencies, particularly for FHA borrowers," Walsh said. Key Findings of MBA's Q3 National Delinquency Survey: » Compared to last quarter, the season- ally adjusted mortgage delinquency rate increased for all loans outstand- ing. By stage, the 30-day delinquency rate increased 28 basis points to 2.03%, the 60-day delinquency rate increased seven basis points to 0.62%, and the 90-day delinquency bucket decreased nine basis points to 0.98%. » By loan type, the total delinquency rate for conventional loans increased 21 basis points to 2.50% over the pre- vious quarter. The FHA delinquency rate increased 55 basis points to 9.50%, and the VA delinquency rate increased by six basis points to 3.76%. » On a year-over-year basis, total mort- gage delinquencies increased for all loans outstanding. The delinquency rate decreased by two basis points for conventional loans, increased by 98 basis points for FHA loans, and increased by five basis points for VA loans from the previous year. » 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 Q3 was 0.49%, down four