The fourth-quarter 2003 National Delinquency Survey released today by the Mortgage Bankers Association shows that the seasonally adjusted delinquency rate for mortgage loans on one-to-four-unit residential properties fell to 4.49 percent in the fourth-quarter 2003, down 16 basis points from 4.65 percent in third-quarter 2003.

The foreclosure inventory percentage at the end of the fourth-quarter was 1.29 percent, five basis points higher than the third-quarter rate of 1.24 percent, while the seasonally adjusted percentage of new foreclosures increased one basis point from 0.44 percent in the third-quarter to 0.45 percent in the fourth-quarter.

The MBA has revised its historical delinquency rate series to make it consistent with the increased number of subprime loans now in the survey. The revised series shows that overall mortgage delinquencies are at their lowest level since the second-quarter of 2000 when the rate was 5.51 percent.

The percentage of loans in foreclosure, while up from the third quarter, is down from the 1.51 foreclosure inventory percent one year ago and the high of 1.54 percent in the first quarter of 2002.

“As the economic recovery continues, delinquency rates are declining from their post-recession peaks and the combined levels of home purchases and increases in home prices are evidence of a fundamentally sound housing market,” said Doug Duncan, MBA’s senior vice president and chief economist.

For prime loans, the seasonally adjusted delinquency rate fell five basis points from 2.45 percent in the third-quarter to 2.4 percent in the fourth-quarter. During the fourth quarter, the percentage of prime loans in foreclosure registered a two basis point increase from 0.53 percent to 0.55 percent, while the percentage of prime loans that entered the foreclosure process during the quarter was 0.2 percent, unchanged from the previous quarter.

Among subprime loans, the seasonally adjusted delinquency rate declined 110 basis points (12.69 percent to 11.59 percent) during the fourth-quarter. At the end of the fourth-quarter, the foreclosure inventory percentage was 5.63 percent, down from 5.74 in the third-quarter. The seasonally adjusted percentage of subprime loans on which foreclosures were started during the fourth-quarter increased 22 basis points.

The seasonally adjusted delinquency rate for FHA loans increased 10 basis points, rising from 12.13 percent in the third quarter to 12.23 percent in the fourth quarter. The percentage of FHA loans in foreclosure registered a 13 basis point increase, going from 2.8 percent to 2.93 percent, whereas the percent of loans entering the foreclosure process during the quarter decreased seven basis points from 0.98 percent to 0.91 percent. The percentage of FHA loans in foreclosure is a record high, as it was in the third quarter.

Based on the revised data, this marks the first time that FHA total delinquency rates are clearly above those for subprime loans. FHA delinquencies exceeded those for subprime loans in the 30-, 60- and 90-plus-day delinquency categories, while the percentages of foreclosures started and foreclosure inventory remained higher for subprime loans.

During the fourth quarter, delinquency rates decreased in all four Census regions. The delinquency rate decreased 30 basis points to 4.57 percent in the North Central, 32 basis points to 5.42 percent in the South, 17 basis points to 3.04 in the West, and 29 basis points to 3.99 percent in the Northeast region.

One subprime company was not able to provide a geographic breakdown of its portfolio so the regional declines are slightly higher than the national decline.

Foreclosure inventory rates saw slight changes across all four Census regions as compared with the third quarter rates. The percentage of loans in the process of foreclosure increased two basis points to 1.31 percent in the Northeast and 1.38 percent in the South, remained steady at 1.75 percent in the North Central, and decreased two basis points to 0.68 in the West.

Across all Census regions the percentage of loans entering the foreclosure process saw moderate changes during the fourth quarter. Compared to the third quarter, the seasonally adjusted percentage of loans entering the foreclosure process decreased three basis points (0.32 percent to 0.29 percent) in the West and two basis points (0.52 percent to 0.5 percent) in the South, while increasing two basis points (0.36 percent to 0.38 percent) in the Northeast and three basis points (0.53 percent to 0.56 percent) North Central regions.

Washington, D.C.-based Mortgage Bankers Association is a national association representing the real estate finance industry.

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