MBA survey shows decreased residential foreclosures

The second-quarter 2005 National Delinquency Survey, released Sept. 15 by the Mortgage Bankers Association, shows that 1 percent of loans were in the foreclosure process at the end of the second quarter, a drop of 18 basis points from the previous year and a drop of eight basis points from the first quarter of 2005. The seasonally adjusted rate of loans entering the foreclosure process was 0.39 percent in the second quarter, down one basis point from the previous year and down three basis points from the first quarter.

The seasonally adjusted delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 4.34 percent at the end of the second quarter, down 22 basis points from the second quarter of 2004 but up three basis points from the first quarter of this year. This quarter’s survey results cover approximately 39.9 million loans (29.7 million prime loans, 5.3 million subprime loans and 4.9 million government loans).

“The U.S. economy grew at almost 3.3 percent in annualized real terms during the second quarter of 2005, adding 205,000 payroll jobs per month, “ said Doug Duncan, MBA’s chief economist and senior vice president, in a news release. “Combined with the low interest rate environment, consumers improved their household finances and the percentage of homeowners making their mortgage payments on time increased to nearly 96 percent.”

Duncan noted that delinquency rates are expected to rise during the next several quarters in the states affected by Hurricane Katrina – primarily Louisiana and Mississippi.

“The first effects of Katrina on delinquencies should be seen in the 30-to-59-days delinquent category reported in the third quarter, with more complete impacts reflected in the fourth quarter numbers. In addition, higher energy costs may exacerbate delinquency rates starting in the fourth quarter,” he said.

Mortgage rates

The seasonally adjusted delinquencies for adjustable-rate and fixed-rate mortgages are generally down from last year and last quarter.

Over the year, the seasonally adjusted delinquency rate for prime ARM products is down seven basis points (from 2.26 percent to 2.19 percent), while the percentage among prime fixed rate mortgage products decreased nine basis points (from 2.11 percent to 2.02 percent). Since the second quarter of 2004, the seasonally adjusted delinquency rate for subprime ARM products has decreased eight basis points (from 10.12 percent to 10.04 percent), while the rate for subprime fixed-rate mortgages dropped 72 basis points (from 9.78 percent to 9.06 percent).

Foreclosure inventory

The foreclosure inventory percentage decreased for all loan types for the year: seven basis points for prime loans (from 0.49 percent to 0.42 percent), 111 basis points for subprime loans (from 4.4 percent to 3.29 percent), 30 basis points for Federal Housing Administration loans (from 2.59 percent to 2.29 percent) and 20 basis points for Veterans Administration loans (from 1.45 percent to 1.25 percent). In addition, the foreclosure inventory percentage declined from last quarter among all loan types: four basis points for prime loans, 20 basis points for subprime loans, 27 basis points for FHA loans, and 13 basis points for VA loans.

For the last year, the seasonally adjusted percentage of new foreclosures was down 1 basis point for prime loans (from 0.19 percent to 0.18 percent), 19 basis points for FHA loans (from 0.95 percent to 0.76 percent), and 11 basis points for VA loans (from 0.50 percent to 0.39 percent), while increasing 8 basis points among subprime loans (from 1.18 percent to 1.26 percent). Since the last quarter, the percent of new foreclosures decreased 28 basis points for subprime loans, 10 basis points for FHA loans and 1 basis point for VA loans, while remaining unchanged for prime loans (0.18 percent).

The seriously delinquent rate, defined as the nonseasonally adjusted percentage of loans that are 90 days or more delinquent or in the process of foreclosure, was down from last year and last quarter. This additional measure conforms to a number of standard definitions and is designed to account for inter-company differences on when a loan enters the foreclosure process. In the second quarter of 2005, the percent of loans that were seriously delinquent was 1.83 percent, 20 basis points lower than second quarter of 2004 and 6 basis points lower than first quarter 2005.

The Mortgage Bankers Association is the national association representing the real estate finance industry.

[[In-content Ad]]