Mortgage Delinquency Rate Drops to Historic Low and Foreclosure Activity Stabilized in April

WRE News

The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 3.56% by the end of the first quarter of this year, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. This represented a 40-basis-point drop from the previous quarter and a 55-basis-point year-over-year decline.

“The mortgage delinquency rate fell to its lowest level for any first quarter since MBA’s survey began in 1979 and was the second lowest quarterly rate overall, just 11 basis points above the survey low in the third quarter of 2022,” said Marina Walsh, MBA’s vice president of industry analysis. “Mortgage delinquencies and the unemployment rate continue to track each other closely, with the unemployment rate in April falling back to the 54-year low of 3.4% set in January.”

The percentage of loans on which foreclosure actions were started in the first quarter rose by 2 basis points to 0.16%. By loan type, the total delinquency rate for conventional loans decreased 34 basis points to 2.44% over the previous quarter while the FHA delinquency rate decreased 134 basis points to 9.27% and the VA delinquency rate decreased by 18 basis points to 3.98%.

“Consistent with the resilient job market, the performance of existing mortgages is exceeding expectations. Across all states, there was an improvement in the first quarter compared to one year ago,” added Walsh. “Year-over-year delinquencies for all product types – FHA, VA, and conventional – were also down.”

Last month saw a total of 32,977 U.S. properties with foreclosure filings, a 10% decline from the previous month but an 8% uptick from one year earlier.

According to data from ATTOM, one in every 4,234 housing units had a foreclosure filing in April. Lenders started the foreclosure process on 22,455 properties in April, down 7% from March and only 1% above the April 2022 level. A total of 2,919 properties were repossessed through completed foreclosures in April, down 39% from the previous month but up 3% from last year.

The states with the highest foreclosure rates were Illinois (one in every 2,221 housing units with a foreclosure filing), Maryland (one in every 2,283 housing units), New Jersey (one in every 2,334 housing units), South Carolina (one in every 2,495 housing units) and Delaware (one in every 2,603 housing units). Atlantic City, New Jersey, was the major metro with the highest foreclosure rate, with one in every 1,356 housing units carrying a foreclosure filing.

“Foreclosure activity continues to stabilize and even correct itself in 2023, with April showing a 10% decrease in overall activity after a 20% increase last month,” said ATTOM CEO Rob Barber. “While there is no apparent indication of a continued decline in the number of foreclosures, it’s important to note that the month of April typically exhibits a recurring trend of decreased activity. However, this trend underscores the significance of monitoring foreclosure rates and identifying any potential market shifts or trends.”