Delinquencies drop to 25-year low, but foreclosure filings are rising

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The third-quarter delinquency rate fell to its lowest point since 1995, according to the Mortgage Bankers Association. However, Attom Data Solutions' numbers show foreclosure filings experienced a near-term growth spurt in October.

The third quarter's seasonally adjusted delinquency rate was 3.97%, down from 4.47% year-over-year and from 4.53% in the second quarter, based on the MBA's national survey.

"Mortgage delinquencies decreased in the third quarter across all loan types — conventional, VA, and in particular, FHA," Marina Walsh, the MBA's vice president of industry analysis, said in a press release. "The FHA delinquency rate dropped 100 basis points as weather-related disruptions from the spring waned. The labor market remains healthy and economic growth has been stronger than anticipated. These two factors have contributed to the lowest level of overall delinquencies in almost 25 years."

"Looking ahead, we do continue to monitor the credit profile of new FHA loans, as changes to this profile can have a noticeable impact on future delinquency rates," Walsh added.

The foreclosure rate also fell on a quarter-to-quarter basis by 4 basis points to 0.21%, according to the MBA.

But the fourth quarter opened with a bump in foreclosure filings, according to Attom's Foreclosure Market Report. Foreclosure filings were placed on 55,197 properties in October, marking a 13% increase from September and a decline of 17% year-over-year. Even though foreclosure filings dropped annually, the month-to-month rise is worth watching to see if it is a typical seasonal increase, or could possibly signal a budding trend.

"While foreclosure activity across the United States rose in October, in looking at historical trends, October numbers tend to increase as lenders may be pushing filings through the pipeline before the holiday season," said Todd Teta, chief product officer at Attom. "The latest number is still below where it was a year ago and less than 15% of what it was during the depths of the Great Recession."

One in every 2,453 housing units had a foreclosure filing in October. New Jersey had the highest foreclosure filing rate with one in every 1,316 housing units. Illinois followed with one in every 1,336 units, then Maryland with one in every 1,484 units.

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Delinquencies Distressed Foreclosures Mortgage defaults Mortgage Bankers Association Attom Data Solutions