DS News - Digital Archives

18 DELINQUENCY RATES DROP TO LOWEST SINCE 2008 e Mortgage Bankers Association (MBA) released its National Delinquency Survey in February, reporting the seasonally adjusted rate for delinquent mortgages is 6.39 percent, the lowest level since 2008. e figure represents mortgage loans for one- to four-unit residential properties and takes into account all loans outstanding at the end of the fourth quarter of 2013. Any loans that are at least one payment past due are counted in the delinquency rate, but not loans that are in the process of foreclosure. e rate for loans in the foreclosure process was reported as 2.86 percent, down 22 basis points from the third quarter. e figure was 88 basis points lower than last year. "We continue to see substantial improvement in both delinquency and foreclosure rates, with most measures now back to pre-crisis levels," said Michael Fratantoni, MBA's chief economist and SVP of research and industry technology. "e delinquency rate, at 6.39 percent, is more than 3 percentage points lower than its peak of over 10 percent in 2010 and is edging closer to the historical average of around 5 percent." Fratantoni continued, "e percentage of loans in foreclosure has fallen for the seventh consecutive quarter, decreasing to 2.86 percent, the lowest level in 6 years. e percentage of new foreclosures started, at 0.54 percent, is the lowest in 8 years and is back within its typical historical range." e .54 percent rate of non-seasonally ad- justed foreclosure starts is the lowest level since 2006. e percentage of loans 90 days or more past due or in the foreclosure process was 5.41 per- cent, representing a 24 basis point decrease from last quarter, and a decline of 137 basis points from Q 4 2012. e report noted that most of the seriously delinquent loans are remnants from the housing crisis. "Loan cohorts from 2009 and earlier continue to make up more than 90 percent of seriously delinquent loans," Fratantoni said. "Loans originated in 2007 and earlier accounted for 75 percent of the seriously delinquent loans, while loans originated in 2008 and 2009 accounted for another 16 percent. is is important to note because current home prices, while still rising, are about 9 percent below the peak in 2007." Statewide, 49 states and the District of Co- lumbia recorded a decrease in foreclosure rates. Florida leads the nation with a foreclosure rate of 8.56 percent. New Jersey and New York had the next 2 highest rates, but both states recorded a decline in foreclosure rates from the previous quarter. FANNIE MAE DIVIDEND PAYMENTS TO EXCEED TREASURY DRAWS Fannie Mae released its Comprehensive Income Statement for the fourth quarter of 2013, noting a quarterly comprehensive income of $6.6 billion. It was the eighth con- secutive quarterly profit for the government- sponsored enterprise (GSE). e report noted the positive quarterly income "contributed to Fannie Mae's positive net worth of $9.6 billion as of December 31, 2013." Annual net income for Fannie Mae was $84 billion. e company will pay $7.2 billion in dividends on senior preferred stock to the U.S. Department of the Treasury in March, 2014. e payment marks "the first time in which the company's cumulative dividend payments to Treasury will exceed its total draws," the statement reports. rough the end of December, 2013, Fannie Mae requested cumulative draws totaling $116.1 billion and paid $113.9 billion in dividends to Treasury. e March payment will exceed total Treasury draws. "Fannie Mae has not received funds from Treasury since the first quarter of 2012," ac- cording to the report. Since January 1, 2009, Fannie Mae has provided $4.1 trillion in liquidity to the mortgage market through its purchasing and guaranteeing of loans. e GSE enabled bor- rowers to complete 12.3 million refinancings, 3.7 million home purchases, and financed 2.2 million units of multifamily housing. Fannie Mae credited the strong earnings of Q 4 2013 to stable revenues, credit-related income, and fair value gains. Credit-related income specifically received boosts from an increase in home prices, a decline in the de- linquency rate, and "updated assumptions and data used to estimate the company's allowance for loan losses in 2013." e report noted further factors in the increased income: "Fannie Mae's 2013 financial results also were positively affected by the release of the company's valuation allowance against its deferred tax assets and the large number of resolutions the company entered into during the year relating to representation and warranty matters and servicing matters." However, the report is cautious about the foreseeable future, noting that while the GSE expects to remain strong in the coming years, net income in the future is expected to drop from 2013.

• Cover