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National Delinquency Rate Drops to Pre-Crisis Numbers

UntitledQ4 of 2013 reported a delinquency rate for mortgage loans on 1-4 unit properties to a rate of 6.39%.  The delinquency rate takes into account those loans that are at least one payment past due, and does not take into account loans that are currently being foreclosed upon.  The 6.39% has been adjusted for the winter season, and boasts the lowest rate since Q1 of 2008.

 Q4 of 2013 reported the percentage of loans in the process of foreclosure as 2.86% — the lowest foreclosure rate observed since 2008.  Both the foreclosure rate and the delinquency rate are approaching the historical averages.  The historical averages were the more typical rates prior to 2008.

MBA’s chief economist and SVP of Research and Industry Technology, Michael Fratantoni states,

“Loan cohorts from 2009 and earlier continue to make up more than 90% of seriously delinquent loans.  Loans originated in 2007 and earlier accounted for 75% of the seriously delinquent loans, while loans originated in 2008 and 2009 accounted for another 16%.  This is important to note because current home prices, while still rising, are about 9% below the peak in 2007.  Therefore, borrowers with loans originated in 2007 will be more vulnerable to traditional delinquency and foreclosure trigger events such as divorce, job loss, health issue, or a death in the household.”

The good news is, since less risky loans are being made, even if there is an increase in prices and rates, the U.S. should not run into massive foreclosure rates.  Foreclosures are also currently down due to the economy improving and the unemployment rate going down.  The rise in home values has also acted as a lifejacket to “underwater” borrowers who had an outstanding balance on their mortgage greater than the home was worth.

California was hit very hard by the mortgage bubble bursting, but it now has one of the lower foreclosure rates in the country.

If you have any questions about the information herein, feel free to reach out to the Author, Brittany Williams, at Brittany.williams@broadviewmortgage.com.  If you would like a quick preapproval Click Here, and for assistance with down payment or buyer assistance Click Here.  You are also always free to give us a call Toll Free (855) 692-7623.

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