Homeowners pay up
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Despite the weak economy, the number of homeowners who are delinquent with their mortgage payments dropped and the number of foreclosures remained flat compared with the previous quarter, according to the Mortgage Bankers Association of America's quarterly survey.
Home price appreciation combined with strong housing demand may have helped some financially strapped homeowners avoid delinquency and foreclosure, said MBA SVP and Chief Economist Doug Duncan today at a press conference.
The seasonally adjusted delinquency rate for mortgage loans on one-to-four unit residential properties was 4.66 percent at the end of the third quarter of 2002, down 11 basis points from the second quarter and down 17 basis points from the third quarter of 2001.
"There's some good news in this survey. We believe that delinquencies have peaked and, as the economy continues its recovery, the housing market will continue to make its contribution," said Duncan.
The decline in the total number of delinquencies was driven by a drop in the percentage of loans that were 30 days delinquent, from 3.20 percent in the second quarter to 3.06 percent. The 60-day delinquency percentage was unchanged at .79 percent and the percentage of loans 90 days or more past due increased from .78 percent to .82 percent.
For conventional loans, total delinquencies dropped from 3.10 percent in the second quarter of 2002 to 3.04 percent in the third quarter. FHA delinquencies decreased from 11.81 percent to 11.62 percent, and VA delinquencies decreased from 8.00 percent to 7.81 percent.
The MBA also announced the debut of a sub-prime market snapshot, citing the growth of the sub-prime market. MBA's third quarter 2002 survey includes more than 34 million loans and as a percent of all loans in the survey, sub-prime loans increased from 1.8 percent to 3.6 percent over the last five years, while the FHA percentage of the total has fallen from 20.8 percent to 15.6 percent and the VA percentage has fallen from 9.4 percent to 5.6 percent.
Duncan cautioned that the subprime data represents information from 13 companies including 1.2 million loans and are not considered representative of the total subprime market. He said the data would be augmented with additional subprime company data in future quarters.
The results show that for prime conventional loans, the total delinquency rate fell from 2.64 percent in the second quarter to 2.54 percent in the third quarter. The prime conventional delinquency rate fell 32 basis points from a year earlier.
The total percentage of loans in the process of foreclosure was 1.15 at the end of the 2002 third quarter, up from a revised 1.13 percent at the end of the second quarter. The percentage of loans that entered the foreclosure process during the third quarter remained essentially unchanged, dropping from a revised .38 percent in the second quarter to .37 percent in the third quarter, on a seasonally adjusted basis. The 2001 third quarter was also reported at .37 percent.
The percentage of prime loans in the process of foreclosure remained the same at .51 percent from the second quarter to the third quarter, although it rose 6 basis points from the same quarter a year earlier.
The prime conventional data are broadly representative of the industry's performance and contain about 26 million loans.
Washington, D.C.-based MBA is the national association representing the real estate finance industry. Its membership of approximately 2,700 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, life insurance companies and others in the mortgage lending field. |
