September 17, 2021

MP Now News

Mortgage News

Early Stage Delinquencies Sink to All-Time Lows

The Mortgage Bankers Association (MBA) reports that the percentage of long-term mortgages fell 35 basis points (basis points) in the first quarter of 2021. According to Marina Walsh, vice president of the MBA, it did
largest quarterly fall in arrears
in the history of the Association’s National Delinquency Survey.

The national crime rate for mortgage loans for one to four residential units was 6.38 percent, seasonally adjusted, at the end of the quarter. The interest rate includes forbearance loans if borrowers fail to make payments as agreed but not foreclosure loans.

The crime rate peaked at 8.22 percent in the second quarter of 2020 and has fallen 184 basis points to 6.38 percent in three quarters. However, despite the improvements, the overall rate is still 202 basis points higher than at the same point in time in 2020.

“Mortgage default rates continued to decline in the first quarter of 2021 as a recovering job market and stimulus checks helped borrowers keep their mortgage payments up to date,” Walsh said. “Late payment mortgages are closely tied to the US unemployment rate, and with unemployment down from last year’s rise, many households appear to be doing better.”

Early-stage arrears decreased quarter on quarter. The 30-day rate decreased 32 basis points to 1.46 percent, the lowest rate since the survey began in 1979. The 60-day crime rate decreased 10 basis points to 0.67 percent, the lowest rate since second quarter of 2000. The sum of crimes in the two early stages is also the smallest on MBA records. However, the 90-day delinquency bucket increased 7 basis points to 4.25 percent.

By loan type, the overall conventional loan crime rate decreased from 5.09 percent to 4.57 percent, the FHA rate increased 2 basis points to 14.67 percent, and the VA crime rate increased 33 basis points to 7.62 percent. Total mortgage defaults increased 141 basis points for conventional loans, 498 basis points for FHA loans and 297 basis points for VA loans year-over-year.

The percentage of loans that were foreclosed on in the first quarter increased 1 basis point to 0.04 percent. The foreclosure inventory contained 0.54 percent of all loans, a decrease of 2 basis points and 19 basis points from the previous quarter and the first quarter of 2020, respectively. This is the lowest foreclosure portfolio rate since the first quarter of 1982. The serious crime rate, the percentage of loans overdue 90 days or more, or in foreclosure was 4.70 percent, down 33 basis points for the quarter but rose 303 basis points for the year.

“Despite the gratifying improvement in mortgage defaults and positive employment prospects, the default rate last quarter is still 105 basis points above the historic quarterly average of 5.33 percent,” added Walsh. “We continue to see seriously criminal loans – loans that are more than 90 days past due or in foreclosure – at heights. especially for FHA and VA borrowers.
Many of these borrowers reach later stages of crime as the moratoria on forbearance and foreclosure are still in place. After exiting long-term forbearance, regardless of their improving employment prospects, some borrowers may need more complex training options, such as: B. Loan changes to stay in their homes. “