Both the delinquency rate and the foreclosure inventory rate in Q4 2014 for residential mortgage loans fell to their lowest levels since 2007, according to the Mortgage Bankers Association's National Delinquency Survey released Wednesday.
The delinquency rate, which includes loans that are at least one payment past due but not loans in foreclosure, fell to a seasonally-adjusted rate of 5.68 percent in Q4 for all mortgage loans outstanding at the end of the quarter, the lowest level since the third quarter of 2007. The delinquency percentage in Q4 represented a decline of 17 basis points from the previous quarter and 71 basis points from the same quarter a year earlier.
The percentage of loans in foreclosure for Q4 also experienced a sharp decline, down to 2.27 percent – the lowest foreclosure inventory rate since the fourth quarter of 2007. The foreclosure inventory rate for Q4 was down 12 basis points from the previous quarter and 59 basis points year-over-year.
The percentage of loans on which the foreclosure process began ticked slightly upward by two basis points quarter-over-quarter in Q4, up to 0.46 percent. This was still a decline of eight basis points year-over-year, however. The serious delinquency rate – percentage of loans either 90 days or more past due or in foreclosure – fell to 4.52 percent, a drop of 12 basis points quarter-over-quarter and 89 basis points year-over-year.
"Delinquency rates and the percentage of loans in foreclosure decreased for another quarter and were at their lowest levels since 2007," said Marina Walsh, MBA’s Vice President of Industry Analysis. "We are now back to pre-crisis levels for most measures. The foreclosure inventory rate has decreased every quarter since the second quarter of 2012, and is now at the lowest level since the fourth quarter of 2007. Foreclosure starts ticked up two basis points, after being flat last quarter, largely due to state-level fluctuations in the speed of the foreclosure process. Compared to the same quarter last year, foreclosure starts are down eight basis points."
According to Walsh, 45 states experienced a quarter-over-quarter decline in foreclosure inventory rate in Q4. Fewer than half of the states saw an increase in 30-day delinquencies, and foreclosure starts jumped in 28 states during the quarter. The foreclosure inventory was roughly three times in judicial states compared to non-judicial states during Q4 (3.79 percent in judicial states compared to 1.23 percent in non-judicial states, according to Walsh. States that used both judicial and non-judicial foreclosure processes reported a foreclosure inventory rate of 1.43 percent.