Thursday, August 9, 2012
CHICAGO — Mortgage delinquencies rose in the second quarter to a seasonally adjusted rate of 7.58 percent of all mortgages, up from 7.4 percent in the first quarter, the Mortgage Bankers Association reported today.
Delinquencies are still down from a year ago, when a seasonally adjusted 8.44 percent of mortgages were delinquent, according to the report. Delinquencies include mortgages that are at least one payment past due but have not yet entered the foreclosure process.
“Mortgage delinquencies were up only slightly over the last quarter,” said Jay Brinkmann, MBA’s chief economist, in a news release.
“Perhaps more important than the small size of the increase, however, is the fact that it reversed the trend of fairly steady drops in delinquencies we have seen over the last year. This is consistent with the slowdown in the economy during the first half of the year and our stubbornly high unemployment rate,” he said.
Delinquency rates often increase between the first and second quarters of the year. They tend to go down in the first quarter, as year-end bonuses and tax refunds help borrowers get current on their mortgages, Brinkmann said. In the second quarter, rates return to a more normal level.
But this quarter, delinquencies rose beyond seasonal expectations.
“We will have to see where the rest of the economy goes, because it will pull housing along with it,” Brinkmann said in a telephone interview.
The combined percentage of mortgages either in foreclosure or with at least one payment past due was a non-seasonally adjusted 11.62 percent, up from 11.33 percent in the first quarter and down from 12.54 percent a year ago.
The percentage of mortgages somewhere in the foreclosure process was 4.27 percent in the second quarter, down from 4.39 percent in the first quarter and 4.43 percent a year ago.
And the percentage of mortgages entering the foreclosure process was 0.96 percent in the second quarter, unchanged from last quarter and also unchanged from last year. Foreclosure starts would have fallen if it weren’t for a sizable jump in starts on mortgages backed by the Federal Housing Administration, Brinkmann said.
“The jump was due to one or more large servicers of FHA loans restarting foreclosure actions on delinquent FHA loans after the completion of the Department of Justice review and the mortgage-servicing settlement,” Brinkmann said. “It does not, however, represent a significant decline in FHA performance. These loans had been considered seriously delinquent for some time and have now been moved from the 90-plus day delinquency bucket to the in foreclosure bucket, with little net change.”
The MBA survey covers 42.5 million loans on one- to four-unit residential properties, or about 88 percent of all first-lien residential mortgages outstanding in the United States.