The Mortgage Bankers Association fourth quarter 2011 survey on Mortgage Delinquencies found that the mortgage market is improving faster than economic conditions. The delinquency rate for all loans fell to 7.58 percent in Q4 2011—a drop of 41 basis points (bp) sequentially from Q3 2011 and down 67 bp from the quarter in 2011. The normal delinquency rate prior to the housing bubble burst hovered at 5 percent but climbed to 10.1 percent at the apogee. The delinquency rate today, according to the MBA is 7.58 percent—so we are now officially half-way back to normal.
Foreclosure starts are also performing in a similar manner. Normal for foreclosure starts is 0.40 percent, which peaked in 2009 at 1.41 percent, and today has retreated to less than 1 percent—again approaching halfway back to normal.
Not progressing as quickly are the foreclosures themselves. Prior to the recession, foreclosures tracked along at just less than 1 percent, hit 4.5 percent at the crest, and today are just slightly less than that number. Part of this has to be a function of the government’s restrictions on lender ability to foreclose and the delays put in place by the various lawsuits (state attorney generals—which were reported as having been settled earlier this week, and other robosigning issues). And that is good news since the quicker this shadow inventory disappears from the market, the quicker housing will rebound.
Delinquency data showed a decline of 38 percent from Q4 in 2010 to Q4 2011 (those behind in payments 90 days or more) while 60-day-plus delinquencies were down 5 percent sequentially from Q3 2011 and off 10 percent year-over-year.
- All delinquencies declined except FHA loans, which rose by 27 percent from Q3 to Q4 2011
- Subprime ARM loans Q4 2011 delinquency rate was 22.4 percent—a whopping 267 percent improvement from Q3 2011
- Subprime fixed-rate loans, at 19.67 percent in Q4 2011, dropped by 157 percent
- Prime ARM loans fell by 151 percent to 8.22 percent in Q4 2011
- Fixed-rate prime loans dropped 20 percent to 4.12 percent
Mortgage News Daily, in an article released this week , features several MBA graphs. Pay attention to Chart 4 in their report detailing the percentage of loans in foreclosure for each state (this chart also delineates whether a state uses a non-judicial or judicial foreclosure process). In states with a judicial foreclosure, the foreclosure is taken through the court system while non-judicial foreclosure states have no court intervention and follow state statutes. RealtyTrac has a reference guide and information on foreclosure processes and timelines for each state.
Five states today, Florida, California, Illinois, New York and New Jersey (which have 32 percent of loans serviced), make up 52 percent of all loans in foreclosure.
The bottom line is that things are improving, progress is being made, and we continue to have a trajectory of recovery in the housing market—and that is good news.