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August 13, 2014 4:45 am
Data released by the Mortgage Bankers Association (MBA) indicates that the delinquency rate for mortgage loans on one-to-four-unit residential properties, considered single-family properties, decreased to a seasonally adjusted rate of 6.04 percent of all loans outstanding at the end of the second quarter of 2014, seven basis points less than its level in the first quarter of 2014 and 92 basis points below its level one year ago. The serious delinquency rate has now reached its lowest level since the fourth quarter of 2007.
The year-over-year decline in the share of mortgages past due, measured on a not seasonally adjusted basis, reflected a decline across each stage of delinquency. In addition, the foreclosure inventory also fell. The percentage of all loans past due fell by 84 basis points over the past four quarters. Loans 30-59 days past due fell by 47 basis points, loans 60-89 days past due fell by 13 basis points, and loans 90 or more days past due decreased by 24 basis points. The foreclosure inventory fell by 84 basis points over the past four quarters. In sum, the serious delinquency rate, the portion of loans either 90 or more days late or in the foreclosure inventory decreased by 108 basis points over the past year.
Similarly, the decline in the serious delinquency rate of more recent vintages correlates with an increase in the weighted average FICO score of borrowers. Since 2013, the weighted average FICO score has come down slightly even as the seriously delinquent portion of mortgages originated in 2013 and in the first six months of 2014 continues to fall. However, despite the recent decline in the weighted average FICO score over the past 18 months, it is still above the 708 recorded in the years prior to 2006.
The decline in the serious delinquency rate among more recent mortgage originations also coincides with a decrease in the share of mortgages where the unpaid balance exceeds the value of the underlying house, a situation where the borrower is considered “underwater.”
Published with permission from RISMedia.
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