Delinquencies and foreclosures at six-year low

by Ryan Smith25 Feb 2014
Delinquency and foreclosure rates have dropped to their lowest levels in six years, according to data released by the Mortgage Bankers Association.

The delinquency rate for mortgages on one- to four-unit residential properties dropped to a seasonally adjusted rate of 6.39% in the fourth quarter, the MBA reported. That’s two basis points lower than the previous quarter and 70 basis points down from a year ago.

The percentage of mortgages in foreclosure dropped to 2.86% in the fourth quarter, down 22 basis points from the third quarter and 88 basis points from a year ago. The drop marked the lowet foreclosure inventory rate since 2008, according to the MBA. Foreclosure starts were also down, dropping to 0.54% -- the lowest level since 2006.

“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 senior vice president of research and industry technology. “The 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. The percentage of loans in foreclosure has fallen for the seventh consecutive quarter, decreasing to 2.86 percent, the lowest level in six years. The percentage of new foreclosures started, at 0.54 percent, is the lowest in eight years and is back within its typical historical range.”

Fratantoni cited broad improvement in foreclosure rates across the nation, with 49 states and the District of Columbia recording a decrease in Q4.

“Florida still leads the nation in the percentage of loans in foreclosure, but that percentage has fallen to 8.56 percent from a peak of 14.5 percent,” he said. “New Jersey and New York had the next two highest rates but both states did see a drop from the previous quarter.”