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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 62 March 2024 J O U R N A L MORTGAGE DELINQUENCIES RISE FOR SECOND CONSECUTIVE QUARTER T he delinquency rate for mort- gage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3. Eighty-eight percent of all loans out- standing at the end of the fourth quarter of 2023, according to the latest Mortgage Bankers Association's (MBA) National Delinquency Survey. The delinquency rate was up 26 basis points from Q3 2023, but down eight basis points from one year ago. The historical average for the seasonally adjusted mortgage delinquency rate from 1979 through 2023 is 5.25%. FHA delin- quencies were up 131 basis points. The percentage of loans on which foreclosure actions were started in Q4 remained unchanged at 0.14%. "Mortgage delinquencies increased across all product types for the second consecutive quarter," said Marina Walsh, CMB, MBA's VP of Industry Analysis. "While the overall delinquency rate is still very low compared to the historical average, the pace of new loans entering delinquency picked up and some loans moved into later stages of delinquency. The resumption of student loan payments, robust personal spending, and rising balances on credit cards and other forms of consumer debt, paired with declining savings rates, are likely behind some bor- rowers falling behind at the end of 2023." Key findings of the MBA's Q4 Nation- al 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 seven basis points to 2.10%, the 60-day delinquency rate increased 11 basis points to 0.73%, and the 90-day delinquency bucket increased seven basis points to 1.05%. Default Servicing » By loan type, the total delinquency rate for conventional loans increased 11 basis points to 2.61% over the previous quarter. The FHA delinquency rate increased 131 basis points to 10.81%, the highest level since Q3 2021. The VA delinquency rate increased by 31 basis points to 4.07%. » On a year-over-year basis, total mort- gage delinquencies decreased for all loans outstanding. The delinquency rate decreased by 17 basis points for conventional loans, increased by 20 basis points for FHA loans, and decreased by nine 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 pro- cess of foreclosure. The percentage of loans in the foreclosure process at the end of the fourth quarter was 0.47%, down two basis points from Q3 2023, and 10 basis points lower than one year ago. This is the lowest foreclosure inventory rate since Q4 2021. » The non-seasonally adjusted seriously delinquent rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 1.52%, matching the lowest level since 1984. It remained unchanged from last quarter and decreased by 37 basis points from last year. Compared to a year ago, the seriously delinquent rate decreased by 26 basis points for conventional loans, 98 basis points for FHA loans, and 42 basis points for VA loans. The five states with the largest quar- terly increases in their overall delinquen- cy rate were: Louisiana (77 basis points), West Virginia (53 basis points), Illinois (44 basis points), Texas (44 basis points), and New Mexico (42 basis points). "The labor market is still quite resilient with the unemployment rate—strongly correlated with mortgage performance—remaining at 3.7% in January," Walsh added. "Any weakening in employment conditions would likely lead to more borrowers falling behind on their payments in the coming quarters." The Bureau of Labor Statistics (BLS) recently reported that unemployment rates were higher in December than a