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Mortgage loan delinquency hits 2 year low; foreclose rate ties highest on record

The Mortgage Bankers Association released the results of it’s National Delinquency Survey for the 4th quarter of 2010 and it shows very mixed results. On the positive side of things, overall mortgage loan delinquency in the U.S. has dropped to 8.22 percent which is the lowest rate since 4th quarter 2008 when the rate was 7.88 percent. On the flip side of the coin, the overall foreclosure rate for the quarter was 4.63 percent which ties the highest rate on record which was hit in the 1st quarter of 2010. Mortgage delinquency trend showing improvement…

The overall mortgage loan delinquency rate peaked at 10.06 percent in 1st quarter 2010 and has dropped each quarter since down to 8.22 percent in the 4th quarter. The 4th quarter 2010 rate of 8.22 is a 13 percent decrease from the year before when the rate was 9.47 percent.

In terms of the levels of delinquency (30 days, 60 days, 90+ days), all three levels saw decreases from the prior quarter as well as from a year ago with the largest quarterly, as well as year-over-year, decline being the 90+ day delinquent category with declines of 16.3 percent and 21.4 percent respectively.

Foreclosures showing mixed signs…

The foreclosure rate of 4.63 percent for 4th quarter 2010 equaled the record set in 1st quarter 2010 and is a 5.5 percent increase from the prior quarter and a 1.1 percent increase from a year ago.

When looking at just the “new” foreclosures in 4th quarter (the ones that were started during the quarter) we see a slightly different story however…the foreclosure “starts” rate in 4th quarter was 1.27 percent, a 5.2 percent decrease from the prior quarter however still a 5.8 percent increase from a year ago.

The rate of “seriously delinquent (90+ days) and foreclosure inventory was 8.57 percent for 4th quarter 2010 which is a decrease of 1.5 percent from the prior quarter and a decrease of 11.3 percent from a year ago.

Where is the foreclosure rate headed in 2011?

Delinquent mortgages are the precursor to foreclosures and with delinquency rates declining I think it is pretty safe to say that, absent some abrupt change in the mortgage delinquency trend, we will see fewer foreclosures in 2011 than in 2010. The rate of foreclosure in 2011 is still going to be at elevated levels but at least trending downward.

mba-delinquency-foreclosure-4th-2010

Source: Mortgage Bankers Association

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