Looking For Good News

It’s not as hard as it used to be to find good news in the Mortgage Bankers Association’s delinquency survey.

It used to be that the only glimmer of good news was in the performance of Department of Veterans Affairs mortgages and a small contiguous area of low-delinquency states in the Midwest/Mountain area (the Dakotas, Montana, Wyoming).

And those things continue to perform well. DVA delinquencies, for instance, have fallen steadily since the start of 2009 and in 30-day past dues, they are as low as the precrisis level of the first quarter of 2006!

Both Dakotas remain below 5% overdues (as does Alaska), and Wyoming and Montana are just a little above 5%.

But these nuggets are joined this time by a welcome wide sweep of deceases. The national overall rate decreased to 9.85%, 21 basis points lower than the quarter before. The foreclosure starts rate was down quarter to quarter. The seriously delinquent rate was down quarter to quarter. Prime loan delinquency was down. Even subprime overdues edged down slightly. Federal Housing Administration fixed-rate loans were down.

Of course, you don’t have to look too far to see what still remains seriously broken. Subprime adjustable-rate loans, for instance, jumped another 41 bps quarter to quarter. Three out of 10 subprime ARMs are overdue nationwide, and the total is higher for individual states.

The New England area, for instance, has a total of one in three subprime ARMs delinquent, with Rhode Island leading the way at 36.4%. The results for FHA are mixed, as overdues are down for fixed-rate FHAs but up for FHA adjustables. All in, FHA overdues increased by 14 bps.

States with the worst percentages include Mississippi, 13.66%, Nevada, 13.23%, and Georgia, 12.39%.

Foreclosure inventory was highest in Florida, at 14.04%, Nevada at 10.33%, and a state which has flown beneath the radar screen but is third, New Jersey, at 6.28%.

MBA’s survey is only a sample, but it is a hefty sample, including 44.5 million serviced mortgages. Prime loans surveyed come to 32.9 million, while subprime comprises 4.5 million loans and FHA 5.8 million loans.

Is it possible we’ve seen the turning point in the avalanche of overdues and foreclosures over the past three years? It is probably too soon to say. But the numbers look encouraging, for the first time in a long time.