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National Delinquency Survey says delinquency rate in Q3 sets new record.

In the third quarter of 2009, the delinquency rate for loans on one-to-four-unit residential properties continued to soar, climbing 265 basis points from the third quarter of 2008. The seasonally adjusted delinquency rate--at 9.64 percent--hit a new record, according to the Mortgage Bankers Association, which has been keeping delinquency data since 1972.

MBA's National Delinquency Survey (NDS) also found that the percentage of loans on which foreclosure actions were started was up 6 basis points from the second quarter and up by 35 basis points from the third quarter of 2008.

The percentage of loans in the foreclosure process at the end of the third quarter of 2009 was 4.47 percent. That was up by 17 basis points from the second quarter of 2009 and climbed by 150 basis points from one year ago.

The NDS reported that the combined percentage of loans in foreclosure or at least one payment behind was 14.41 percent on a non-seasonally adjusted basis. That combined rate was the highest ever recorded in the history of the survey, MBA said.

The third-quarter NDS broke records on a number of fronts. The percentage of loans 90 days or more past due, loans in foreclosure and foreclosures started all set new highs. However, the percentage of loans 30 days past due is still below the record set back in the second quarter of 1985.

MBA's Chief Economist Jay Brinkmann noted performance continues to deteriorate for prime fixed-rate loans, and the culprit is largely unemployment. Brinkmann said, "Prime fixed-rate loans continue to represent the largest share of foreclosures started and the biggest driver of the increase in foreclosures. [Thirty-three] percent of foreclosures started in the third quarter were on prime fixed-rate loans, and those loans were 44 percent of the quarterly increase in foreclosures. The foreclosure numbers for prime fixed-rate loans will get worse, because those loans represented 54 percent of the quarterly increase in loans 90 days or more past due but not yet in foreclosure."

The third-quarter NDS found that both subprime fixed-rate and subprime adjustable-rate loans saw decreases in foreclosures.

As for states with the worst problems, they continue to be the same four names we have been hearing about for a long time. Brinkmann said, "Once again, the states of Florida, California, Arizona and Nevada have a disproportionate share of the mortgage problems. They had 43 percent of all foreclosures started in the third quarter, down only slightly from the 44 percent seen both last quarter and the third quarter of last year. They had 37 percent of the nation's prime fixed-rate loan foreclosure starts and 67 percent of the prime ARM [adjustable-rate mortgage] foreclosure starts. As of the end of September, 25 percent of the mortgages in Florida were at least one payment past due or in foreclosure."

As for the outlook, it doesn't sound that hopeful anytime soon. Brinkmann said, "The outlook is that delinquency rates and foreclosure rates will continue to worsen before they improve." He predicted that the employment picture is unlikely to get better until sometime in 2010, and "even then jobs will increase at a very slow pace." MBA's top economist added, "Perhaps more importantly, there is no reason to expect that when the economy begins to add more jobs, those jobs will be in areas with the biggest excess housing inventory and the highest delinquency rates."
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Title Annotation:Briefing Book
Comment:National Delinquency Survey says delinquency rate in Q3 sets new record.(Briefing Book)
Publication:Mortgage Banking
Article Type:Survey
Geographic Code:1USA
Date:Jan 1, 2010
Words:562
Previous Article:LPS finds total delinquencies 32 percent higher than year ago.
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