by Calculated Risk on 11/10/2021 10:11:00 AM
The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 4.88 percent of all loans outstanding at the end of the third quarter of 2021, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.
For the purposes of the survey, MBA asks servicers to report loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage. The delinquency rate was down 59 basis points from the second quarter of 2021 and down 277 basis points from one year ago.
“For the fifth consecutive quarter, the mortgage delinquency rate declined, commensurate with a decline in the U.S. unemployment rate over the same time period,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “The improvement was driven entirely by a decline in later-stage delinquent loans – those loans that are 90 days or past due, but not in foreclosure. By the end of the third quarter, many borrowers were approaching the 18-month expiration point of their forbearance terms and were being placed in permanent home retention solutions, such as modifications and loan deferrals.”
Walsh added, “Once these borrowers entered permanent post-forbearance workouts and resumed payments, they moved from delinquent to current status.”
This graph shows the percent of loans delinquent by days past due. Overall delinquencies decreased in Q3.
From the MBA:
Compared to last quarter, the seasonally adjusted mortgage delinquency rate decreased for all loans outstanding. By stage, the 30-day delinquency rate increased 10 basis points to 1.51 percent, the 60-day delinquency rate remained unchanged at 0.52 percent, and the 90-day delinquency bucket decreased 68 basis points to 2.85 percent.
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 third quarter was 0.46 percent, down 5 basis points from the second quarter of 2021 and 13 basis points lower than one year ago. This is the lowest foreclosure inventory rate since the fourth quarter of 1981. The percentage of loans on which foreclosure actions were started in the third quarter fell by 1 basis point to 0.03 percent, which is the lowest starts rate reported in the survey and consistent with the last three quarters of 2020.
This sharp increase last year in the 90-day bucket was due to loans in forbearance (included as delinquent, but not reported to the credit bureaus).
The percent of loans in the foreclosure process declined further, and was at the lowest level since 1981.