Delinquencies have continued to decline, hitting their lowest level since 2008.
New data from the Mortgage Bankers Association's National Delinquency Survey shows that the delinquency rate on one-to-four unit residential properties fell in the third quarter to 6.41% of all loans. This represents the lowest proportion since the second quarter of 2008. The delinquency rate fell 0.55% from the previous quarter, and 0.99% from a year ago.
VA loans in particular saw an improvement in delinquencies, and are now at their lowest delinquency rate since 1980.
Foreclosures fell as well, with the percentage of loans on which foreclosure actions were started decreasing from 0.64% to 0.61%, the lowest since early 2007.
“The degree to which the mortgage delinquency and foreclosure problem has changed over the last five years is perhaps best illustrated by the fact that last quarter New Jersey led the nation in the increase in the percentage of foreclosure actions filed, followed by Delaware, Maryland and Indiana. While Florida still leads the nation in the percentage of loans in foreclosure, that percentage is falling. In contrast, New York and New Jersey were the only two states that saw an increase in the percentages of loans in foreclosure,” said Jay Brinkmann, MBA’s Chief Economist and SVP of Research and Education.
While foreclosures are set to continue their decline, Brinkmann said they could remain above historical averages for some time.
"While home prices have shown some considerable improvement, in only a small number of states are they back above their pre-2007 levels. This is noteworthy because roughly three-quarters of all seriously delinquent loans were originated in 2007 or earlier. So even if the economy continues to improve, those loans are more likely to proceed to foreclosure in the event of a divorce, illness or loss of a job because of lack of borrower equity. This will keep the foreclosure rates above historical norms for a few more years despite the strong credit standards of recent vintages."