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Where Mortgage Delinquency Rates Are Improving Most


foreclosureSome of the the biggest drops in delinquency were seen in federal home loans, notably FHA loans, according to new data from the Mortgage Bankers Association's [1] (MBA) National Delinquency Survey. Marina Walsh, MBA's VP of Industry Analysis, noted that the MBA will "continue to monitor the credit profile of new FHA loans, as changes to this profile can have a noticeable impact on future delinquency rates."

"Mortgage delinquencies decreased in the third quarter across all loan typesconventional, VA, and in particular, FHA," said Walsh. "The FHA delinquency rate dropped 100 basis points, as weather-related disruptions from the spring waned. The labor market remains healthy and economic growth has been stronger than anticipated. These two factors have contributed to the lowest level of overall delinquencies in almost 25 years."

Delinquency rates have fallen to their lowest rate in 25 years, and on a year-over-year basis, total mortgage delinquencies decreased for all loans outstanding. The delinquency rate decreased by 56 basis points for conventional loans, decreased 74 basis points for FHA loans, and decreased 23 basis points for VA loans.

The FHA delinquency dropped the most from the second quarter, by 100 basis points, to 8.22%, and the VA delinquency rate decreased by 31 basis points to 3.93%. The total delinquency rate for conventional loans decreased 61 basis points to 3.00% compared to the second quarter. Additionally, the three states with the largest decreases in their overall delinquency rate were states impacted by weather in the previous quarter: Alabama (81 basis points), West Virginia (78 basis points), and Mississippi (73 basis points).

Many of the loans that fell into delinquency were older loans. One key finding in the survey was that just 14% of all seriously delinquent loans were originated in 2016 or later. However, 25% of FHA seriously delinquent loans were originated in 2016 or later.