More than one in 10 homes with mortgages were behind on their payments or in foreclosure in the fourth quarter of 2008 — the highest proportion in records dating back to 1972, the Mortgage Bankers Association said today.
About 7.88 percent of all mortgages outstanding on one- to four-unit residential properties were at least one payment past due during the fourth quarter, and another 3.3 percent were in foreclosure. The combined delinquency and foreclosure rate of 11.18 percent was a record, as were the percentage of loans 60 days or 90 days or more past due.
While the rate of new foreclosures remained essentially flat for the last three quarters of 2008, foreclosure inventory and the percentage of loans 90 days or more past due jumped sharply in the fourth quarter.
State and local moratoriums on foreclosure sales, Fannie Mae and Freddie Mac’s decision to halt foreclosure sales in November, an overburdened legal process, and "a general reluctance by servicers to proceed with evictions in the last few weeks of December" helped keep the rate at which loans entered the foreclosure process unchanged during the fourth quarter.
"This might be seen as a good sign for mortgage performance, but most other measures point to exactly the opposite conclusion," said MBA Chief Economist Jay Brinkmann in a statement.
California, Florida, Nevada, Arizona and Michigan continue to dominate the delinquency numbers, but some of the sharpest increases in 90-day delinquencies were in Louisiana, New York, Georgia, Texas and Mississippi — a sign that the impact of the recession is spreading, Brinkmann said.
Brinkmann expects to see a continued shift in delinquencies that are tied to job and income loss, rather than underwriting standards and adjustable-rate mortgage (ARM) loans.
The 30-day delinquency rate for subprime ARM loans is at a low not seen since early 2007 and continues to fall, Brinkmann said, and the problem with initial interest-rate resets on ARM loans "is largely behind us." The last 2-28 subprime loans were written in the first half of 2007, he said, and the impact of resets "was generally overstated."
Delinquency rates continue to climb across the board for prime fixed-rate and subprime fixed-rate loans, with performance driven by the loss of jobs or income rather than changes in payments, Brinkmann said.
For prime loans, the seasonally adjusted delinquency rate rose 72 basis points from quarter-to-quarter, to 5.06 percent. Delinquencies on subprime loans increased 185 basis points, to 21.88 percent.
Some 13.73 percent of FHA loans were delinquent during the fourth quarter, an increase of 81 basis points. Delinquencies on VA loans increased 24 basis points to 7.52 percent.
The percentage of prime loans in the foreclosure process increased 30 basis points to 1.88 percent, while the foreclosure rate for subprime loans was up 116 points to 13.71 percent. FHA loans saw an 11-basis-point increase in the foreclosure inventory rate to 2.43 percent, while the foreclosure inventory rate for VA loans increased 20 basis points to 1.66 percent.
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