Mortgage Loan Delinquencies Declined in Q3

Mortgage Loan Delinquencies Declined in Q3

The third quarter of 2021 brought about mortgage loan delinquencies on one-to-four-unit residential properties down to 4.88 percent, according to the Mortgage Bankers Association's National Delinquency Survey.

If a mortgage payment is not made according to the original terms, the MBA asks servicers to report it as delinquent. The percentage of delinquencies was down 59 percentage points from the second quarter of 2021.

Last quarter, the seasonally adjusted delinquency rate for all loans outstanding decreased. Deficiencies increased by 10 basis points to 1.51%, 60 basis points to 0.52%, and 90 basis points to 2.85%.

In the previous quarter, the total delinquency rate fell by 34 basis points to 3.55%. FHA and VA loan delinquency rates decreased 143 basis points to 11.34% and 5.81%, respectively. These three loan types had their lowest delinquency rates since the first quarter of 2020.

Foreclosures are not included in delinquency rates if at least one payment is past due. In the third quarter of 2021, the percentage of loans in foreclosure was 0.46%, down by five points from the previous quarter and down 13 basis points from last year. Mortgage foreclosure starts in the third quarter fell by one basis point to 0.03%, the lowest rate reported in the survey and similar to the last three quarters of 2020.

Non-seasonally adjusted seriously delinquent loans, those 90 days or more behind or in foreclosure, were at 3.40. This has reduced by nearly 63 basis points from the previous quarter by 176 basis points from last year. Seriously delinquent rates decreased 49 basis points for conventional loans, 129 basis points for FHA loans, and 54 basis points for VA loans. The seriously delinquent rate for conventional loans decreased by 156 basis points, 257 basis points for FHA loans, and 129 basis points for VA loans.

Nevada (98 percentage points), Hawaii (83 percentage points), New Jersey (74 percentage points), Maryland (72 percentage points), and Connecticut (71 percentage points) led the way in reducing their delinquency rates quarterly.

As of October 31, 2021, approximately 1 million homeowners were in forbearance. If a loan payment cannot be made based on the original terms of the loan, the MBA asks servicers to report it as delinquent.