MBA Report Reveals Drop in Residential Mortgage Loan Delinquency Rate | McGlinchey Stafford


American Bar Association’s Business Law Today May Month-In-Brief: Business Regulation & Regulated Industries

The Mortgage Bankers Association’s (“MBA”) First Quarter 2022 National Delinquency Survey revealed that the delinquency rate for mortgage loans on 1–4-unit residential properties decreased to 4.11% of all loans outstanding at the close of the first quarter of 2022. This rate, according to the MBA, represents a decrease of 54 basis points from the fourth quarter of 2021 and 227 basis points from one year ago. Further, MBA Vice President of Industry Analysis Marina Walsh notes that the delinquency rate dropped for the seventh consecutive quarter, reaching its lowest level since the fourth quarter of 2019. Walsh credits the improvement in loan performance to the movement of loans that were ninety days or more delinquent, with most of these delinquencies either being cured or entering post-forbearance loan workouts.

Additionally, the MBA found that the expiration of pandemic-related foreclosure moratoriums resulted in a modest increase in foreclosure starts from the record lows that persisted over the past two years. The MBA expects foreclosure starts to remain low due to the limited housing inventory, rising prices, and variety of available home retention and foreclosure alternatives.

Other notable findings of the 2022 survey include:

  • Compared to last quarter, the seasonally adjusted mortgage delinquency rate decreased for all loans. By stage, the thirty-day delinquency rate decreased 6 basis points to 1.59%, the sixty-day delinquency rate remained unchanged at 0.56%, and the ninety-day delinquency bucket decreased 48 basis points to 1.96%.
  • By loan type, the total delinquency rate for conventional loans, those that are up to ninety days past due, decreased 55 basis points to 3.03% over the previous quarter, the lowest level since the fourth quarter of 2019. The FHA delinquency rate decreased 118 basis points to 9.58%, the lowest level since fourth quarter of 2019. The VA delinquency rate decreased 38 basis points to 4.86%, the lowest level since first quarter of 2020. The rate for seriously delinquent loans, those that are ninety days or more past due or in foreclosure, declined to 2.39%—44 basis points lower than last quarter and 231 basis points lower than last year, its lowest point since the pandemic began.
  • The percentage of loans in foreclosure at the end of the first quarter was 0.53%, up 11 basis points from the fourth quarter of 2021 and down 1 basis point from one year ago. The percentage of loans on which foreclosure actions were started in the first quarter rose by 15 basis points to 0.19%. The foreclosure starts rate remains below the quarterly average of 0.41% dating back to 1979.
  • The five states with the largest quarterly decreases in their overall delinquency rate were: Louisiana (168 basis points), New Jersey (109 basis points), Indiana (105 basis points), Mississippi (97 basis points), and Maryland (97 basis points).

Reprinted with permission from the American Bar Association’s Business Law Today May Month-In-Brief: Business Regulation & Regulated Industries.

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