Delinquencies Drop in First Quarter

The Mortgage Bankers Association’s (MBA) delinquency survey reports that the delinquency rate at the end of the first quarter of the year fell to 4.71 percent for mortgages on one-to-four single family properties.

The MBA credited the decline to drops in the FHA and VA delinquency rates from the previous quarter. The delinquency rate for conventional loans was unchanged.

Also helping push down the delinquency rate, according to the MBA, was strong employment growth as well as a small (2.8 percent) increase in the average hourly wage.

The delinquency rate fell nine basis points from the fourth quarter of 2016 and was six basis points lower than in the comparable year ago period.

In a prepared statement, Marina Walsh, MBA VP of industry analysis, said that delinquencies tend to pick up in the fourth quarter of each year as residential property owners dedicate higher portions of their incomes to heating costs and holiday spending.

“First quarter results indicate that the increase in FHA delinquencies that we saw in the last quarter of 201 has not been established as an ongoing trend,” she added.

Total loans in the foreclosure process (which are not included in the delinquency rate) was 1.39 percent in the first quarter, representing a 14-basis point drop from the fourth quarter of 2016 and a 35 basis point drop from the comparable year ago period.

Serious delinquencies – those mortgages that are or more past due or in the process of foreclosure, dropped significantly to 2.76 percent, representing a 53-basis point decline from first quarter in 2016 and a 37-basis point decline from the fourth quarter of last year.

Serious delinquencies fell in all 50 states and in the District of Columbia. Additionally, the percentage of loans in foreclosure fell in most of the 50 states.

However, new foreclosure actions increased slightly, according to the report. Foreclosures started in the first quarter stood at .3 percent, representing an increase of two basis points than in the fourth quarter of 2016, but five basis points lower in the comparable year ago period.

This marked the first increase in foreclosure starts since 2014. Since there was a sizeable drop in the serious delinquencies, Walsh theorized that legacy distressed loans were kept in the late stage delinquency portfolio of many lenders rather than going into foreclosure.