The percentage of delinquent mortgages declined and fewer loans were in foreclosure in the last quarter of 2011, says the Mortgage Bankers Association.
About 7.58 percent of outstanding mortgages were past due in the fourth quarter, a decline of 41 basis points on the seasonally adjusted delinquent rate. When compared to the first quarter of 2010, when the delinquency rate peaked at 10.1 percent, it is a significant improvement.
But we're still only halfway through the problem, says Jay Brinkmann, MBA’s chief economist. Prior to the recession, the delinquency rate was about 5 percent, according to the MBA.
Another good sign is the combined percentage of loans that were in foreclosure or at least one payment past due was 12.63 percent, a 10 basis point decrease compared to the third quarter.
Lenders also started fewer foreclosures in the last quarter. Foreclosure actions were started on 0.99 percent of loans, down 9 basis points compared to the third quarter and 28 basis points lower than the fourth quarter of 2010.
"Mortgage performance continued to improve in the fourth quarter, reflecting the improvement we saw in the job market and broader economy," Brinkmann says. "The total delinquency rate and foreclosure starts rate decreased and are back down to levels from three years ago."
Delinquency rates and foreclosure starts fell in almost all types of loan, including prime, subprime and ARMS. The exception was FHA loans, which saw an increase in delinquency and foreclosures
"Part of the reason is that the FHA book of business has shown rapid growth," he says. "And purchase loans originated in 2008 and 2009 are only now entering the peaks of a normal delinquency curve.
Before the crisis, FHA-insured loans accounted for about 3 percent of all mortgages. These days, FHA loans account for about 30 percent of the market, the MBA says.
More than half of all mortgages in foreclosure are concentrated in a handful of states: California, Illinois, New York and New Jersey.
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