The delinquency rate on all outstanding residential mortgages fell to a three-year low in the fourth quarter with most loan types improving except for one product: FHA.
According to figures compiled by the Mortgage Bankers Association, the national delinquency rate – excluding foreclosures – dropped to 7.58%, the lowest reading since 4Q 2008 when the rate was 7.88%.
National Mortgage News estimates that roughly $700 billion of home mortgages are currently in arrears, not including foreclosures. Consumers owe $9.23 trillion on their one- to four-family loans.
Late payments peaked in the first quarter of 2010 at 10.06%.
The trade group noted that the outlook for severely delinquent loans improved slightly in 4Q with 0.99% of loans entering foreclosure during the period compared to 1.08% in 3Q, and 1.27% a year ago.
The delinquency rate on subprime loans improved to 20.83%, the best reading since the third quarter of 2008, MBA said.
FHA loans, on the other hand, are getting worse: delinquencies rose to 12.36% at yearend compared to 12.09% in 3Q and 12.27% a year earlier. Moreover, the inventory of FHA foreclosures rose to 3.54% in 4Q, the highest reading since the second quarter of 2010.
There is a growing concern in Washington – and the mortgage industry – that FHA may need to tap a line of credit it has with the U.S. Treasury to keep its mortgage insurance fund in the black.
MBA chief economist Jay Brinkmann said in a statement that, “Mortgage performance continued to improve in the fourth quarter, reflecting the improvement we saw in the job market and overall economy.”
Brinkmann noted that a big reason for the progress in late payments is tied to vintages: “…loans that are seriously delinquent are predominantly made up of loans originated prior to 2008 and this pool is steadily growing smaller as a percent of total loans outstanding.”
