Residential Delinquency Rate Takes a Dip in Q4 2009

The latest release from the Mortgage Bankers Association, contained a bit of good news in that the delinquency rate for mortgage loans on 1-4 unit residential properties fell 17 basis points to a seasonally adjusted rate of 9.47 percent.

Some other notable bites from the release…

• The percentage of loans on which foreclosure actions were started during the fourth quarter was 1.20 percent, down 22 basis points from last quarter and up 12 basis points from one year ago.
• The percentages of loans 90 days or more past due and loans in foreclosure set new record highs. The percentage of loans 30 days past due is still below the record set in the second quarter of 1985.
• 30-day delinquencies actually fell by 16 basis points from 3.79 percent to 3.63 percent. Only three times before in the history of the MBA survey has the non-seasonally adjusted 30-day delinquency rate dropped between the third and fourth quarter and never by this magnitude. This drop is important because 30-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures.
• The pattern of mortgage delinquencies now very much follows the pattern of unemployment. Just as short-term delinquencies have fallen during the latter part of 2009, first-time claims for unemployment insurance have declined by about a third since their peak in March 2009.

My takeaway: We still have a record amount of loans in foreclosure, but the leading indicators are beginning to brighten up a bit.