The Mortgage Bankers Association (MBA) reported that mortgage applications decreased 1.8 percent from one week earlier and the delinquency rate decreased 86 basis points for the second quarter year over year.
The 1.8 percent drop in the Weekly Mortgage Applications Survey for the week ending Aug. 3 is the result of the Refinance Index dropping 2 percent and the seasonally adjusted Purchase Index decreasing 1 percent from a week earlier. The refinance share of mortgage activity was unchanged from last week at 81 percent of total applications. The adjustable-rate mortgage (ARM) share of activity decreased to 4 percent from the previous week.
On the delinquency side of things, the National Delinquency Survey for the second quarter showed an increase to a seasonally adjusted rate of 7.58 percent of all loans outstanding as of the end of the second quarter of 2012, an increase of 18 basis points from the first quarter, but a decrease of 86 basis points from one year ago. Delinquency rates typically increase between the first and second quarters of the year.
The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The big story is the decline of the rate of seriously delinquent loans — 90 days or more past due — which was 7.31 percent, a decrease of 13 basis points from last quarter and a decrease of 54 basis points from one year ago. The percentage of loans on which foreclosure actions were started during the second quarter was 0.96 percent, unchanged from last quarter and from one year ago. The percentage of loans in the foreclosure process at the end of the second quarter was 4.27 percent, down 12 basis points from the first quarter and 16 basis points lower than one year ago.
The combined percentage of loans in foreclosure or at least one payment past due was 11.62 percent on a non-seasonally adjusted basis, a 29 basis point increase from last quarter, but a 92 basis points decrease from the same quarter one year ago.
“Mortgage delinquencies were up only slightly over the last quarter. Perhaps more important than the small size of the increase, however, is the fact that it reversed the trend of fairly steady drops in delinquencies we have seen over the last year,” said Jay Brinkmann, MBA’s chief economist. “This is consistent with the slowdown in the economy during the first half of the year and our stubbornly high unemployment rate. Whether this is just a temporary blip or a sign of a true change in direction for mortgage performance will fundamentally depend on the direction of employment over the remainder of the year.”
While the rate of new foreclosure filings was unchanged, Brinkmann said that rate would have fallen were it not for the considerable jump in foreclosure starts on FHA loans. This quarter’s rate set an all-time record for FHA loans, but it was only slightly higher than the previous high set in 2010. The jump was due to one or more large servicers of FHA loans restarting foreclosure actions on delinquent FHA loans after the completion of the Department of Justice review and the mortgage servicing settlement. These loans had been considered seriously delinquent for some time and have now been moved from the 90-plus day delinquency bucket to the in-foreclosure bucket, with little net change.
Florida continues to lead the nation in percentage of loans in foreclosure at 13.7 percent, more than three times the national average, followed by New Jersey at 7.7 percent, Illinois at 7.1 percent and New York at 6.5 percent. In contrast, Arizona and California, two of the states hit hardest by the housing downturn, are at 3.2 percent and 3.1 percent respectively, both more than a full percentage point below the national average.
Compared with the second quarter of 2011, the foreclosure inventory rate decreased 14 basis points for prime fixed loans, 85 basis points for prime ARM loans, 86 basis points for subprime fixed, 111 basis points for subprime ARM loans, two basis points for VA loans but increased 99 basis points for FHA loans.