Mortgage delinquency continued to deteriorate as servicers are still managing the fallout in states impacted by last year’s hurricanes. Foreclosure activity has yet to be affected.
At the conclusion of last year, 6.36 percent of all U.S. single-family loans outstanding were either at least 30 days past due or in the foreclosure inventory.
The non-current rate worsened from 6.11 percent as of Sept. 30. Delinquency was also escalated compared to 6.33 percent as of Dec. 31, 2016.
The Mortgage Bankers Association presented those details in its National Delinquency Survey Q4 2017.
A 16-basis-point increase from the end of the third quarter left the non-current rate on conventional mortgages at 5.28 percent. Delinquency on loans insured by the Federal Housing Administration jumped 98 BPS to 12.14 percent, while the rate on mortgages guaranteed by the Department of Veterans Affairs was up 22 BPS to 5.41 percent.
“FHA borrowers appear to be impacted not only by the storms but other factors that could be stretching their ability to make payments,” MBA Vice President of Industry Analysis Marina Walsh explained in an accompanying statement. “Regardless of the hurricanes, an increase in delinquencies — particularly FHA delinquencies — off historic lows is not particularly surprising given the seasoning of the loan portfolio, expected higher interest rates, declining average credit scores on new FHA endorsements since 2014 and rising debt-to-income ratios. Mitigating factors include low unemployment and increasing home equity levels that provide homeowners with more options to cure a potential default.”
The most-recent U.S. non-current rate included seasonally adjusted 30-day delinquency, excluding foreclosures, of 5.17 percent — climbing 29 basis points from three months earlier and 37 BPS worse than one year earlier.
“The 30-day delinquency rate actually dropped by 15 basis points in the fourth quarter of 2017, as homeowners affected by Hurricanes Harvey, Irma and Maria either became current on their payments or moved to later stages of delinquency,” Walsh said. “However, while the earliest-stage delinquency rate dropped, the 60-day and 90-day delinquency rates did increase in the fourth quarter of 2017.”
At 9.20 percent, Mississippi’s 30-day rate was the highest in the nation. Florida followed at 8.89 percent, then 8.07 percent in Louisiana, 7.33 percent in Texas and 6.87 percent in both Alabama and West Virginia..
“Despite the hurricanes and these quarter-over-quarter results, most states are seeing overall mortgage delinquency rates at lower levels than a year ago,” Walsh added.
At just 2.49 percent, Oregon had the lowest 30-day rate.
Ninety-day U.S. delinquency jumped to 1.65 percent from 1.30 percent at the end of the third quarter.
The U.S. foreclosure inventory rate fell to 1.19 percent from 1.23 percent at the end of the third-quarter 2017 and 1.53 percent at the end of 2016.
In New Jersey, the foreclosure rate was 3.61 percent, the highest of any state. Next was New York’s 3.45 percent, then Maine’s 2.54 percent, Hawaii’s 2.18 percent and Connecticut’s 1.96 percent.
Colorado had the lowest rate of foreclosures: 0.32 percent.
The rate of U.S. foreclosure starts was unchanged from the third quarter at 0.25 percent and down from 0.28 percent at the end of 2016.
“Storm-related foreclosure moratoria continue to play a large factor in keeping foreclosure starts at bay, as the fourth quarter saw little movement in either foreclosure starts, or foreclosure inventory,” Walsh said. “As forbearance periods expire, an increase in the percent of loans in foreclosure is likely.
“We anticipate it will be several more quarters before the effects of the September hurricanes on the survey results dissipate, especially given extended forbearance periods.”
