Mortgage delinquency rate

Apache is functioning normally

Apache is functioning normally

What a difference a few years make. Back in 2007 and 2008, lenders were still willing to hand out high-risk mortgages, such as those with limited documentation or no money down (or both).

And they did so at a time when home prices were peaking in many parts of the country, which clearly made for a nasty outcome.

But once the mortgage crisis struck, underwriting guidelines tightened significantly, allowing only the most creditworthy borrowers to take out mortgages.

The evidence of that is now clear, thanks a new analysis from credit bureau TransUnion.

Earlier this month, the company noted that the Q1 2013 mortgage delinquency rate (60 or more days past due) fell 12% from the fourth quarter, and 21% year over year. That pushed the delinquency rate to 4.56%, which is still double the pre-crisis normal.

While this may have raised some eyebrows, seeing that credit card and auto loan delinquencies are around record lows, one needs to realize that it takes time to work things out.

Most of the Bad Mortgages Aren’t New

If you look at the chart above, you’ll notice that older vintages of mortgages have performed much worse than those originated over the past few years.

TransUnion noted that mortgages taken out before 2009 account for 50% of all outstanding mortgages, but 86% of the delinquencies.

And if you look at 2007 vintages in particular, you’ll notice that more than 20% have been delinquent at some time since origination, which is clearly awful.

Conversely, only 2.5% of mortgages made in 2010 have fallen into default over the past three years.

If we look at the 2011 and 2012 numbers, the trend only seems to be getting better, with very few delinquencies on newer vintages.

Additionally, the number of new delinquencies in the older vintages seems to be slowing down, as those who have ridden out the storm may have gotten through the worst of it.

And it if weren’t for the extremely long foreclosure timelines, TransUnion said the mortgage delinquency rate would have peaked in 2009 at about 3.05%, instead of 6.89%.

Meanwhile, the delinquency rate would stand at just 1.68% today, a number deemed “normal.”

The Mortgage Future Looks Bright

In other words, once that festering pool of bad mortgages finally works its way through the system, the residential mortgage market should be pretty pristine.

The big question now is determining the right level of underwriting to ensure those who should be able to obtain mortgages can, while also avoiding another crisis.

It gets a little murky if you look at the old numbers because home prices plummeted after many of those so-called bad mortgages were originated.

But what if prices hadn’t fallen so dramatically? Would many of those mortgages be current, or would the borrowers have been able to refinance again or sell their homes at a profit?

I’m sure plenty of high-quality mortgages went into (strategic) default thanks to the home price drop alone, though at the same time, the prevalence of option arms and other subprime offerings didn’t help matters.

Today’s mortgage quality is also skewed, albeit in a completely different direction – thanks to the ultra low mortgage rates available, it is much easier for borrowers to keep up with payments.

However, we all know mortgage rates will climb in the not-so-distant future, and so banks and lenders must be careful not to take on too much risk prematurely.

As both rates and home prices rise, mortgage payments will become less affordable, and that could usher in a new era of dodgy mortgage products to increase affordability.

We should be extremely careful not to allow that to happen again, especially when the mortgage pool finally looks so unspoiled.

Read more: Will high quality mortgages prevent another bubble?

Source: thetruthaboutmortgage.com

Apache is functioning normally

The rate of mortgage delinquency increased more than nine percent from the first to second quarter, rising to a national average high of 3.53 percent, according to credit bureau TransUnion.

The delinquency rate, which includes borrowers with mortgage payments 60 days or more past due, is up from the previous quarter’s 3.23 percent average and about 51 percent higher than a year earlier.

Nevada led the nation with a delinquency rate of 6.63 percent, followed by Florida at 6.47 percent, while the lowest delinquency rates were found in South and North Dakota, at 1.5 percent and 1.54 percent, respectively.

Over the last quarter, Wyoming (28.3 percent), Oregon (23.5 percent), and Florida (20.2 percent) saw their delinquency rates surge, while six other states, Missouri, Kansas, Nebraska, North Dakota, New Hampshire, and Montana, saw improvement.

Average national mortgage debt per borrower increased 0.4 percent to $192,681, up 3.35 percent from the year-ago average of $186,432.

California’s average mortgage debt of $361,988 was the highest in the nation, followed by the District of Columbia with $355,875 and Hawaii with $304,096.

“The national 60-day mortgage delinquency rate among mortgage borrowers is expected to continue to rise throughout 2008 from a value of 3.53 percent in the second quarter of 2008 to just over 4 percent by year end,” said Keith Carson, a senior consultant in TransUnion’s financial services group.

“However, TransUnion forecasts that later in 2009 the rise in mortgage delinquency rates will taper off as economic conditions improve and home prices begin to stabilize.”

This echoes similar sentiment expressed last quarter after delinquenices climbed eight percent from the fourth quarter.

The mortgage loan delinquency rate has now risen for six consectutive quarters.

(photo: clairity)

Source: thetruthaboutmortgage.com

Apache is functioning normally

The Mortgage Bankers Association (MBA) reported that the mortgage delinquency rate fell to its lowest level since it began tracking this metric 43 years ago, supporting claims the economy is on the cusp of a turnaround.

“Buoyed by a resilient job market, homeowners are continuing to make their mortgage payments,” Marina Walsh, the MBA’s vice president of industry analysis, said in a statement.

The seasonally-adjusted delinquency rate for one-to-four-unit residential properties stood at 3.37% in the second quarter of this year, down 27 basis points compared to the same period one year ago and 19 basis points quarter over quarter, the MBA reported. The percentage of loans on which foreclosure actions were started in the second quarter fell by 3 basis points.

Delinquencies across all mortgage types, including conventional, FHA, and VA mortgages fell during the second quarter. 

Despite this encouraging news, the MBA reported some signs of consumer-related stress, with delinquencies rising for other forms of credit, including credit cards and car loans, noted Walsh. 

In addition, FHA delinquencies rose 10 basis points compared to the year-earlier period, and on a non-seasonally adjusted basis, rose 13 basis points year over year and 71 basis points from the first quarter of 2023.

“As the economy slows and [the] labor market cools, homeowners with FHA loans are likely to feel the distress first,” said Walsh.

Source: housingwire.com

Apache is functioning normally

Mortgage loan delinquencies increased for the eighth straight quarter, according to the latest data from credit bureau TransUnion.

The data, which is pulled from 27 million anonymous, individual credit files, found a whopping 4.58 percent of mortgage holders nationally were at least two months behind in mortgage payments, up from 3.96 percent a quarter earlier and 2.99 percent a year ago.

The 60 day+ delinquency was worst in hard-hit Florida (9.52 percent) and Nevada (9.01 percent), though the delinquency rate also rose roughly 25 percent from the third quarter in Arizona, Montana, and South Dakota.

Average national mortgage debt per borrower grew just over a quarter-percent from the third quarter, and continues to be highest in California, Washington D.C., and Hawaii.

“Unfortunately, the mortgage sector continues to experience increases in the delinquency rate due to worsening economic conditions in both the labor and financial markets,” said Keith Carson, a senior consultant in TransUnion’s financial services group, in a release.

“The fourth quarter of 2008 showed not only an increase in the nation’s unemployment rate and declines in both home prices and per capita disposable income, but a downward slide in consumer confidence. As a result, home ownership continues to deteriorate in a credit market that has shown little signs of thawing even for the most credit worthy consumers.”

Carson said forecasts predict a national mortgage delinquency rate as high as eight percent by year-end, though government efforts to stem foreclosures and buoy home prices could lead to a reversal in 2010.

Florida is expected to experience the highest delinquency rate through 2009, possibly doubling its current nonpayment rate of 9.5 percent (wow).

On the opposite end of the spectrum is North Dakota, which continues to exhibit the lowest delinquency rate in the U.S., which should reach just over 1.5 percent by the end of the year.

Source: thetruthaboutmortgage.com

Apache is functioning normally

Some things just can’t be fixed, like unaffordable mortgages, that is, if you don’t bother making them more affordable.

The OTS released its fourth quarter 2008 Mortgage Metrics Report today, which revealed that nearly half of recent loan modifications fell back into serious default within months.

“For example, the percentage of modified loans that were seriously delinquent (60 or more days past due) after eight months was 41 percent for loans modified in the first quarter and 46 percent for loans modified in the second quarter,” the OTS said in a release.

“The reasons for high re-default rates are not clear.  As noted in the previous quarter’s report, high re-defaults could be the result of a worsening economy, excessive borrower leverage, or poor initial underwriting.”

It’s funny that they say it’s unclear because only 42 percent of loans modified in 2008 resulted in reduced payments, 27 percent did not change the monthly payment, and 32 percent actually increased the monthly mortgage payment.

So I don’t think it’s that much of a mystery why homeowners continue to struggle making payments; the good news is more than half of loan modifications carried out in the fourth quarter resulted in reduced payments.

“Servicers also said their flexibility to reduce payments was in many cases constrained by servicing agreements with government-sponsored entities and other private investors that defined the type and the amount of modification permitted,” the OTS said.

“Recent changes in some government agency and private label servicing standards should afford servicers substantially more flexibility in this regard.”

Here’s another no-brainer from the report: “Re-default rates were consistently lower for modifications that resulted in lower monthly payments.  When modifications decreased monthly payments by more than 10 percent, only about 23 percent of the loans became seriously delinquent six months later.”

“By contrast, some 51 percent of the loans in which payments remained unchanged were seriously delinquent after six months.  The comparable number for loan modifications in which payments increased was 46 percent.”

Sounds like lowering monthly payments is better than keeping them the same or raising them…who knew?

At the end of 2008, just under 90 percent of mortgages were performing, compared with 93 percent as of September 30.

The prime mortgage delinquency rate more than doubled to 2.4 percent at the end of the fourth quarter, up from 1.1 percent at the end of March 2008.

(photo: robyngallagher)

Source: thetruthaboutmortgage.com

Apache is functioning normally

While foreclosures might sound like old news, there are still a ton of borrowers either behind on mortgage payments or in the process of foreclosure.

And it doesn’t appear as if the type of loan they took out was the problem. It’s just the fact that they took out their loan at exactly the wrong time.

And by that, I mean most borrowers facing foreclosure these days are underwater on their mortgages, and deeply underwater at that, possibly because they purchased homes at the height of the market.

That brings us to a new report from Black Knight Financial Services, which revealed that borrowers in negative equity positions accounted for 77% of all active foreclosures, per their latest Mortgage Monitor for the month of March.

So while some might just be having trouble with monthly payments because of a job loss or an illness, or simply because they took on too much mortgage, most are behind because their property values are in the red.

It might be conjecture to say that, but it’s clear there’s little incentive to keep paying an underwater mortgage, especially if it’s still underwater after all the recent home price gains.

Put simply, it makes sense that 29% of underwater borrowers are seriously delinquent on their mortgages.

Cheaper Homes 9X More Likely to Be Underwater

Black Knight also found that borrowers who own the bottom 20 percent of homes by price are nine times more likely to be underwater when compared to those in the top 20 percentile.

In other words, high-end homes have largely avoided the negative equity crisis that has plagued the rest of the market.

This could be a combination of higher down payments, more affluent borrowers, and better performance (rebounding) of higher-end homes.

Overall, their data show that slightly more than eight percent of all borrowers are currently underwater on their mortgages.

The good news is we’ve seen a near-30% decline in the negative equity rate from a year earlier.

The bad news is one of every three borrowers currently in the process foreclosure has a loan-to-value ratio of 150% or more.

For the record, Nevada and Florida continue to lead the country in terms of negative equity rates, with 16.4% and 15.1% of borrowers underwater, respectively.

And Florida and California have the highest number of underwater properties.

Mortgage Delinquencies See Largest Drop in Nine Years

The mortgage delinquency rate has also improved immensely, and though seasonal declines are typical in March, the 12.18% drop seen this year was the largest monthly decline in nearly a decade.

Additionally, declines have been witnessed in all stages of delinquency (30, 60, 90 and 120+ day lates).

In fact, 30-day delinquencies hit their lowest level in over 10 years. And for every 10,000 loans that were current at the end of February, just 73 missed a payment in March, the lowest current-to-30 day late roll rate in over 15 years.

Roll rates from 30-to-60 and 60-to-90 days delinquent also fell to their lowest levels in nine years, and loans that were previously delinquent are curing (becoming current again) at the highest clip since 2005.

So while underwater loans persist, new problem loans seem to be few and far between.

Separately, the MBA reported today that the delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 5.54% as of the end of the first quarter.

This is the lowest recorded rate since the second quarter of 2007.

Meanwhile, just 2.22% of loans were in some stage of foreclosure, down from 2.65% a year earlier, the lowest foreclosure inventory rate since the fourth quarter of 2007.

So it looks as if things are nearly back to normal, though certain areas of the country continue to suffer disproportionately.

The scary part is that NAR thinks home prices are overvalued again, but if prices dip again negative equity-related problems could resurface.

Source: thetruthaboutmortgage.com

Apache is functioning normally

A staggering 22 percent of all mortgages in the state of Florida are non-current, according to a new report from Lender Processing Services.

By non-current, they mean loans that are either delinquent or in some stage of foreclosure; perhaps more troubling is the fact that 10.4 percent of home loans in Florida are in foreclosure.

The LPS October Mortgage Monitor also revealed that the nation’s foreclosure rate was 3.12 percent as of September 30, up 2.6 percent from a month earlier and 88.9 percent year-over-year.

And remember that’s with all the government intervention, foreclosure moratoria, loan modifications, and the like; the national mortgage delinquency rate was 9.37 percent as of September 30.

The report also highlights the large shadow inventory of foreclosed properties that could wreak havoc on home prices and a possible housing recovery.

“The number of loans deteriorating further into delinquent status is now more than twice the number of foreclosure starts, indicating another major wave of troubled loans in an already clogged loan pipeline,” the company said in a release.

“Nearly one-third of foreclosures remain in pre-sale status after 12 months – twice as many as the year prior. The six-month average deterioration ratio has risen the past two months to 300 percent, showing that for every loan that improves in status, three more deteriorate further.”

The only bit of good news in the report was increased loan production, with year-to-date 2009 loan totals of 2,032,973 (28 percent FHA) versus 1,903,723 (16 percent FHA) for the same period in 2008.

(photo: moe)

Source: thetruthaboutmortgage.com

Apache is functioning normally

Apache is functioning normally

The mortgage delinquency rate fell 11 basis points to 3.10% in May, the second lowest national mortgage delinquency rate ever seen.

In May, the number of borrowers just one payment behind improved by 94,000, erasing nearly half of April’s increase, according to Black Knight. (Delinquency numbers in April spiked because the month ended on a Sunday and payments made by borrowers on the last few days of the month couldn’t be processed immediately.)

Meanwhile, the population of “seriously delinquent homeowners” (90 or more days past due on their mortgages) continues to shrink, falling by another 18,000 in April. This puts that population, which currently clocks in at roughly 480,000 in total, down 200,000 from this time last year.  

On the foreclosure side, foreclosure starts ticked up by 2.2%, which came to 25,400 for the month. May’s foreclosure start volume is just a hair above April’s six-month low and, is still running 41% below 2019 levels.

The number of loans in active foreclosure fell by 4,000 from April and is now down 41,000 (-15%) from where we were in March 2020. Foreclosure actions were started on 5.1% of serious delinquencies, up slightly from April, but a full percentage point below March 2020.

The number of loans in active foreclosure improved by 4,000 and is down 15% from March 2020, with foreclosure sales rising 5.5% from April.

Meanwhile, prepayment activity, historically driven largely by refinances and home sales, ticked up again as the market responds to volatile interest rate changes. With a single-month mortality rate of 0.54%, prepays hit their highest level since September of last year, when rates were in the low to mid 6’s for much of the month.

Source: housingwire.com