Mortgage loan delinquencies decreased again during the second quarter of the year at a solid clip across all loan types, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. Federal Housing Administration (FHA) loans saw the largest quarterly decline in recorded history. Researchers attribute much of the recent improvements to an improving jobs situation and late-stage delinquencies entering post-forbearance workout options.
About 5.47% of all loans are delinquent—that is down 91 basis points from the first quarter of 2021 and down 275 basis points from one year ago.
By stage, in Q2, the 30-day delinquency rate decreased 5 basis points to 1.41% and the 60-day delinquency rate decreased 15 basis points to 0.52%, both at their lowest levels in the history of the survey. The 90-day delinquency rate decreased 72 basis points to 3.53%.
For the survey, MBA servicers reported loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage.
MBA's Vice President of Industry Analysis Marina Walsh says all loan types are recording drops in delinquencies.
"Conventional, Federal Housing Administration (FHA), and VA—reached their lowest levels since the first quarter of 2020," she said. "The drop in the delinquency rate for FHA loans and VA loans was the largest quarterly decline for both in the history of MBA's survey dating back to 1979.
"Much of the second-quarter improvement can be traced to later-stage delinquent loans—those 90 days or past due, but not in foreclosure. In fact, the 90-day delinquency rate dropped by 72 basis points, which is another record decline in the survey. It appears that borrowers in later stages of delinquency are recovering due to several factors, including improved employment and other economic conditions, the availability of home retention workout options after forbearance, and a strong housing market that is bringing additional alternatives to distressed homeowners."
Walsh noted that foreclosure moratoria were still in place through the second quarter, resulting in the lowest foreclosure inventory recorded since 1981.
"Once the foreclosure moratoria lift, and forbearance plans expire over the course of the next several months, we expect many homeowners to take advantage of available workout options to avoid the foreclosure process," said Walsh.
The full report is available at MBA.org.