Daily Forecast Update: MBA National Delinquency Survey

February 22, 2010

By Selma Lewis, Research Economist 

Daily Forecast Update

• NAR's monthly official forecast as of February 2nd
• GDP 2010 Q1: +2.1%
• GDP 2010 Q2: +2.0%
• GDP 2010 Q3: +2.5%
• Unemployment rate by the mid-2010: 10.2% ↑
• Average 30-year fixed mortgage rate by mid-2010 2009: 5.4%

What does today's data mean for REALTORS® and consumers?

• The number of distressed homeowners in the pipeline remains significant. However, the number of newly distressed owners entering the pipeline actually fell in the latest data.
• Despite the remarkable number of foreclosures in 2009, data for the last three months of the year showed fewer homeowners falling behind on their mortgage payments than earlier in the year.
• Mortgage delinquencies usually increase at the end of the year as homeowners divert their cash to cover other costs such as heating and holiday expenses, but they fell in the fourth quarter of 2009. If this trend continues, the first quarter of 2010 could show further decline in the number of homeowners entering foreclosure. According to the Mortgage Bankers Association, the 30-day delinquency rate dropping between the third and fourth quarter has only happened 3 times before and never by as much as this time.
• The last quarter data on mortgage delinquencies could mean that a peak in foreclosures could soon occur. This however depends on how the future employment situation plays out, as most of the last year’s foreclosure crisis was fueled by large job cuts across the country. There are about 2.6 million homeowners who missed at least three mortgage payments in 2009 and they will have a significant impact on the housing market in 2010. A significant portion of these homeowners are in the process of modifying their mortgages. The good news is that the rate of new additional homeowners experiencing troubles with their mortgages is falling.

MBA National Delinquency Survey

• According to the 2009 Fourth Quarter National Delinquency Survey from the Mortgage Bankers’ Association, the delinquency rate in the fourth quarter of 2009 for mortgage loans on one-to-four unit residential properties fell to a seasonally adjusted rate of 9.47 percent of all loans outstanding at the end of 2009, down 17 basis points from the third quarter of 2009, and up 159 basis points from one year ago. The third quarter’s number is the highest on record. The non-seasonally adjusted delinquency rate increased 50 basis points from 9.94 percent in the third quarter of 2009 to 10.44 percent this quarter.
• The percentage of loans in the foreclosure process at the end of the fourth quarter was 4.58 percent, an increase of 11 basis points from the third quarter of 2009 and 128 basis points from one year ago. The percentage of loans during the third quarter on which foreclosure actions were started was 1.20 percent, down 22 basis points from last quarter and up 12 basis points from one year ago.
• Compared with last quarter and year-over-year, the non-seasonally adjusted seriously delinquent rate increased for all loan types.
• The combined percentage of loans in foreclosure or those with at least one payment past due was 15.02 percent on a non-seasonally adjusted basis. This is the highest ever recorded.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

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