Residential mortgage delinquencies homes rose for the first quarter 2010 to a seasonally-adjusted rate of 10.06% of all loans outstanding, according to the National Delinquency Survey released last week by the Mortgage Bankers Association (MBA). Unadjusted, the rate of delinquencies fell from 10.44% in the fourth quarter of 2009 to 9.38% in the first quarter of 2010.

The survey includes loans for residences of one-to-four unit homes, and considers loans to be delinquent when there is at least one payment past due - but doesn't count loans in the process of foreclosure.

The rate of loans in the process of foreclosure at the end of the first quarter 2010 reached another record high at 4.63% of all outstanding loans. The non-adjusted percentage of loans that are either delinquent or in the process of foreclosure was 14.01% last quarter, down from 15.02% in the fourth quarter of 2009.

MBA’s chief economist Jay Brinkmann said, "The issue this quarter is that the seasonally adjusted delinquency rates went up while the unadjusted rates went down. Delinquency rates traditionally peak in the fourth quarter and fall in the first quarter and we saw that first quarter drop in the data. The question is whether the drop represents anything more than a normal seasonal decline or a more fundamental improvement. Most importantly, the normal seasonal drop is coming right at the point where we believe delinquencies could potentially be declining and the problem for the statistical models is determining which is which.”

Brinkmann said that it can be difficult to tell the difference between a fundamental improvement and a seasonal improvement over a short period of time, and that "the seasonally adjusted numbers should be viewed with a degree of caution."

“Overall, we see a continuation of the pattern of declines in short-term delinquency rates, at least on a non-seasonally adjusted basis, the continued historically high share of delinquencies that are 90 days or more past due, and a leveling off in the pace of foreclosures.

"For several years, the four states of Florida, Arizona, Nevada, and California have dominated the national delinquency and foreclosure numbers. Florida is still getting worse, but California is showing signs of improvement. However, Washington, Maryland, Oregon, and Georgia showed the greatest overall increases in foreclosures started compared to last quarter," Brinkmann said.

The rate of delinquency in the first quarter increased on a seasonally-adjusted basis for all loan types except FHA mortgages, but declined for all loan types on a non-adjusted basis. Seasonally-adjusted, prime fixed-rate loans had the lowest percentage of delinquencies at 6.17%, followed by VA loans at 7.96%. The delinquency rate for other loan types were a seasonally-adjusted 13.15% for FHA loans, 13.52% for prime ARM loans, 25.69% for subprime fixed loans, and 29.09% for subprime ARM loans.


Source:
Mortgage Bankers Association