Delinquencies Rise, but Foreclosures Abate

Despite a slight increase in delinquencies, the percentage of loans in foreclosure declined in the second quarter, according to the Mortgage Bankers Association of America.The seasonally adjusted delinquency rate on home loans rose to 4.62%, up 10 basis points from that of the first quarter of this year, the MBA reported. However, the delinquency rate remained 15 bps lower than its level of a year earlier. Meanwhile, the number of loans in foreclosure dropped 8 bps to 1.12% from its record level of 1.20% in the first quarter. The MBA cautioned that its data on subprime loans, where the delinquency rate climbed 59 bps to 12.99% in the second quarter, are based on a much smaller sample than the primary delinquency database. The MBA's chief economist advised that quarterly changes in the subprime rate should be viewed with caution, as the changes may be significantly affected by changes in the reporting database.