Seven states had subprime adjustable-rate mortgage delinquency rates of more than 30% in the first quarter of the year, according to the MBA’s latest report. You could probably name them, right? California, Florida, Nevada, Arizona, Michigan...
That would be wrong, though. The actual list is Massachusetts, New Hampshire, Missouri, Maryland, Alabama, Mississippi and Tennessee. And two of the three states with more than 50% seriously delinquent subprime ARMs are New York and New Jersey.
This just goes to show that the overdues problem is not confined to the sand states or California and Florida. With the exception of a few Upper Midwest/Mountain states like the Dakotas, Montana and Wyoming, all areas of the country continue to suffer.
Of course, subprime ARMs are the worst-performing cohort of mortgages, so other categories are doing much better than that. And, there have been some year-to-year declines in delinquency, a trend that should continue as better underwritten books of business come online and the foreclosure glut eases. That won’t be for another year at the very minimum, though.
Prime fixed-rate mortgages continue to have the lowest overdues, at 4.6% seasonally adjusted, according to the survey. VA loans are next, with 6.9% overdue. FHA mortgages are next, at 12%, and finally subprime, at 24%. Subprime foreclosure inventory is 14.7%.
Subprime ARMs, the worst of the worst, are at 26.31% overdue and 22.26% in foreclosure. The small difference between those two percentages may hold out some hope that some of the worst has already passed.
Over the past four years, all loans have seen a more than 400 basis point rise in delinquency. Subprime loans have increased overdues by more than 1,000 basis points. Even prime loans have just about doubled, from 2.58% at the first quarter of 2007 to 5.5% at the first quarter of this year. Quarter-over-quarter, the total delinquency rate edged up by seven basis points to 8.32%. But year-over-year there were some significant declines: 182 bps for prime, 320 bps for subprime, 112 bps for FHA loans and 103 bps for VA loans.
Seriously delinquent loans fell to 8.1% in the first quarter, down 50 bps from the fourth quarter of 2011 and 144 bps from the first quarter of 2010. Foreclosures were off a bit, by 12 bps from the fourth quarter and 11 bps from the first quarter. So, there are a number of encouraging data points in the MBA survey. There always have been, but it used to be you had to look awfully hard to find them.
