The Mortgage Bankers Association said yesterday that the latest National MBA Delinquency Survey showed a decrease in the deliquency rate for mortgage loans on one-to-four-unit residential properties. The delinquency rate for mortgage loans on the properties was 4.84% of all loans in 1Q07. The rate was down 11 basis points from 4Q06, and it rose 43 basis points from a year ago, the MBA said.
The delinquency rate does not include mortgages in the process of foreclosure. These mortgages were 1.28 % of all loans at the end of the first quarter, increasing by nine basis points from the 4Q06, and 30 basis points from one year ago.
Meanwhile, the association reported that the rate of mortgages entering foreclosure was 0.58 % on a seasonally adjusted basis, four basis points higher compared with the previous quarter. The rate rose 17 basis points from a year ago, MBA said.
The delinquency rate is driven by seven states, according to MBA's Chief Economist Doug Duncan. He said that if it were not for Ohio, Michigan and Indiana, the percentage of loans in foreclosure would have been well below the average of the last ten years. Also, the rate of foreclosures that was started nationwide would have dropped if it were not for California, Florida, Nevada, and Arizona. "Those states have special circumstances that do not reflect what is happening in the rest of the country," Duncan said.
Duncan said that although the foreclosure starts have started to increase slightly from last quarter, without California, Nevada, Florida, or Arizona, these would have declined.
These four states, including Maine, had the largest increases coming in -- Nevada with 19 basis points, Florida with 13 basis points, California with12 basis points, Maine with eight basis points and Arizona seven basis points.
Speculators walking away from properties are driving foreclosures in these four states. These speculators are beginning to face falling home prices and ARM resets. Specifically, in Florida, homebuyers are facing higher insurance bills. Duncan said that 26 states had decreases in their foreclosure rates on subprime ARMs, and if it were not for these four states, the national foreclosure rate on subprime ARMs would have slightly declined.
Ohio, Michigan, and Indiana account for 8.7 % of the mortgage loans in the country, which also accounted for 19.9 % of the nation's loans in foreclosure and 15 % of all the foreclosures started in the country in 1Q07, according to Duncan. The level of foreclosures and foreclosure starts has already exceeded what occurred in Texas during the oil bust of the mid-1980s. He said that Ohio now has the highest number of foreclosures and foreclosure starts the MBA has ever seen for a large state.