Interesting facts on mortgage delinquencies
The Mortgage Bankers Association released a report on their mortgage delinquency survey yesterday for the first quarter of 2008. I took the time to read through the report and thought I would share a few of the facts and figures here. There are a few things that jumped out at me, so that will be my focus. Note: unless noted all figures are seasonally adjusted (SA).
First, the big picture numbers: The percentage of mortgages more than 30 days past due was 6.35%, up 0.53% from the 4th quarter and 1.51% from Q1, 2007. This is the highest seasonally adjusted percentage is the highest recorded since 1979. The percentage does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process was 2.47%, up 0.43% from Q4 and 1.19% from a year ago.
Note quote: “The 30 day delinquency percentage is still below levels seen as recently as 2002.”
From deeper in the report I want to parse two subjects: Delinquencies in California and Florida and subprime ARM mortgages.
California and Florida are the main drivers of foreclosure rates. Of new foreclosures started in the quarter these two states had 49% of the subprime ARM and 62% of the prime ARM loans foreclosed, accounting for about 90% of the national increase. The preponderance of foreclosures in California and Florida left 43 states below the average for new foreclosures and 20 states had actual decreases in foreclosures.
CA and FL account for 21% of all mortgages but 36% of new foreclosure starts. For prime ARMs the numbers are 39% and 54%, subprime ARMS: 30% and 42%. These numbers show the two states had a much higher percentage of written ARM mortgages which are resulting in high foreclosure rates. Throw in Arizona and Nevada and these 4 states account for over 50% of the new ARM foreclosures in the country.
On to subprime ARM mortgages. For all of the news and catastrophe warnings on how these mortgages will bring down the U.S. financial system, and have already had a tremendous negative impact on many financial companies I am surprised at the percentages. The seriously delinquent rate, over 90 days late or in foreclosure, for all (ARM & fixed) subprime mortgages was 16.42% and the foreclosure inventory rate was 10.74%. Subprime ARMs accounted for 39% of the foreclosures started in the first quarter. Here is the point I found interesting: Only 6% of all mortgages are subprime ARMs! At the rate these things are defaulting and being foreclosed, in a few quarters there won’t be any left!
My analysis is at this point the continued problems with mortgage delinquencies and foreclosures are mostly confined to the California and Florida markets with an emphasis on subprime ARMs. Most or many parts of the country may have peaked as far as problem mortgages go.
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Got any notes on the foreclosure and delinquent status in Texas? LOL