Housing Bubble
MBA survey shows mortgage delinquencies down
March 24, 2003
Washington, D.C. (March 24, 2003) - The 4th quarter 2002 National Delinquency Survey (NDS) released today by the Mortgage Bankers Association of America (MBA) shows that the share of homeowners who were delinquent with their mortgage payments dropped from the previous quarter, while the percentage of loans in foreclosure increased slightly.
The seasonally adjusted delinquency rate for mortgage loans on one-to-four unit residential properties was 4.53 percent at the end of the fourth quarter of 2002. This represents a drop of 13 basis points from the third quarter and a drop of 14 basis points from the fourth quarter of 2001.
The drop in total delinquencies was driven by a decrease in the number of delinquent loans in all three of the delinquency categories surveyed by MBA. Between the third and fourth quarters of 2002, the percentage of loans 30 to 59 days past due decreased 7 basis points, the percentage of loans 60 to 89 days past due decreased 3 basis points, and the percentage of loans past due 90 days or more decreased 4 basis points, on a seasonally adjusted basis.
While the quarter-to-quarter delinquency rate for conventional loans increased 4 basis points to 3.08 percent, the delinquency rate for FHA loans fell 17 basis points to 11.45 percent. VA loans were virtually unchanged at 7.82 percent. For just those loans 90 days or more past due, conventional loans increased 2 basis points to 0.43 percent, FHA loans decreased 11 basis points to 2.39 percent, and VA loans decreased 2 basis points to 1.65 percent.
Conventional prime loans registered a total delinquency rate of 2.65 percent in the fourth quarter, up 11 basis points from 2.54 percent in the third quarter and down 9 basis points from 2.74 percent the same quarter in the previous year. Conventional sub-prime loans had an overall delinquency rate of 13.29 percent, down 99 basis points from the third quarter and down 118 basis points from the fourth quarter of 2001. Prime delinquencies 90 days or more past due went from 0.28 percent in the third quarter of 2002 to 0.30 percent in the fourth quarter. Sub-prime delinquencies 90 days or more past due went from 3.30 percent to 3.31 percent.*
MBA’s delinquency rate does not include loans anywhere in the process of foreclosure. The percentage of loans that entered the foreclosure process during the fourth quarter declined, dropping from 0.37 percent in the third quarter to 0.35 percent in the fourth quarter, on a seasonally adjusted basis. The foreclosure percentages were 0.86 percent for all conventional loans, 0.54 percent for conventional prime loans, 7.79 percent for conventional sub-prime, 2.78 percent for FHA loans and 1.58 percent for VA loans.
The percentage of loans in the process of foreclosure was 1.18 at the end of the 2002 fourth quarter, up from 1.15 percent at the end of the third quarter. This most likely indicates that loan foreclosures, which lag unemployment and delinquencies, are peaking.
“We expect to see delinquencies fall as the economy improves and generates jobs growth. We are seeing some signs of improvement, but absent a significant or sustained period of growth, expect no major improvement in delinquencies. It should be pointed out that the slight decline in mortgage delinquencies came at the same time personal bankruptcies were setting a new record high,” said Doug Duncan, MBA’s Senior Vice President and Chief Economist. “In general, an increase in delinquencies lags a downturn in the economy, and a decrease in delinquencies lags an improvement in the economy.”
*MBA divides the conventional sample between prime and sub-prime based on whether the servicer handles primarily with prime or sub-prime loans. Therefore, there are some prime loans in the sub-prime sample and some sub-prime loans in the prime sample. Furthermore the sample of sub-prime lenders in the survey is not considered fully representative of the sub-prime market.
Source: Mortgage Bankers Association of America
