Deliquency Foreclosure Rates Welcomed Back To Pre-Crisis Levels

The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 6.39% of all loans outstanding at the end of the fourth quarter of 2013 – the lowest level since the first quarter of 2008.

The delinquency rate decreased two basis points from the previous quarter and 70 basis points from one year before. (The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.)

The percentage of loans in the foreclosure process at the end of the fourth quarter was 2.86%, down 22 basis points from the third quarter and 88 basis points lower than one year before. This was the lowest foreclosure inventory rate seen since 2008, the MBA notes.

The non-seasonally adjusted percentage of loans on which foreclosure actions were started during the fourth quarter decreased to 0.54% from 0.61% – a decrease of seven basis points and the lowest level since 2006.

The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 5.41% – a decrease of 24 basis points from last quarter, and a decrease of 137 basis points from the fourth quarter of the year prior.

Michael Fratantoni, MBA’s chief economist and senior vice president of research and industry technology, notes that most measures are “now back to pre-crisis levels,” the delinquency rate is “edging closer to the historical average” of about 5% and the percentage of new foreclosures started is “back within its typical historical range.”

Fratantoni says that 49 states and the District of Columbia recorded a decrease in foreclosure rates and that while Florida still has the highest percentage of loans that are in floreclosure, the state’s rate fell to 8.56% from its peak of 14.5%. He adds that New Jersey and New York had the highest rates after Florida but both states also recorded a drop.”