Mortgage delinquencies decrease in Q1 2022

MBA survey reveals a steady drop

Mortgage delinquencies decrease in Q1 2022

The delinquency rate for mortgage loans has decreased in the first quarter of 2022, revealed a survey by the Mortgage Bankers Association (MBA).

MBA’s National Delinquency Survey showed that the delinquency rate on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 4.11% for all outstanding loans. This is a decrease of 54 basis points from Q4 of 2021 and 227 basis points from the same quarter last year.

“The mortgage delinquency rate dropped for the seventh consecutive quarter, reaching its lowest level since the fourth quarter of 2019,” said Marina Walsh, MBA’s vice president of industry analysis. “The decrease in delinquency rates was apparent across all loan types, and especially for FHA loans. The delinquency rate for FHA loans declined 118 basis points from fourth-quarter 2021 and was down 509 basis points from one year ago.”

According to the survey, delinquency rate for conventional loans decreased 55 basis points to 3.03% over the previous quarter, reaching the lowest level since the fourth quarter of 2019. Similarly, the FHA delinquency rate decreased 118 basis points to 9.58% – also the lowest level since the fourth quarter of 2019. The VA delinquency rate, meanwhile, decreased by 38 basis points to 4.86%, the lowest since the first quarter of 2020.

Walsh explained that this improvement in loan performance can mostly be attributed to the movement of loans that were 90-days or more delinquent. Most of these aged delinquencies were either cured or entered post-forbearance loan workouts.

The MBA survey also found that the expiration of pandemic-related foreclosure moratoriums led to a modest increase in foreclosure starts. The percentage of loans in the foreclosure process at the end of the first quarter was at 0.53%, increasing by 11 basis points from the fourth quarter of 2021 and falling one basis point from a year ago. The percentage of loans on which foreclosure actions were started in the first quarter rose by 15 basis points at 0.19%. This is still below the quarterly average of 0.41%, dating back to 1979. 

“Given the nation’s limited housing inventory and the variety of home retention and foreclosure alternatives on the table across various loan types, the probability of a significant foreclosure surge is minimal,” said Walsh. “Borrowers have more choices today to either stay in their homes or sell without resorting to a foreclosure.”

An estimated 525,000 homeowners were on forbearance plans as of March 31, 2022. The MBA asked servicers to report the loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage.