Real estate debt repayment rates drop in the second quarter of 2022

by Calculated risk on 8/11/2022 10:45:00 AM

From the MBA: Mortgage defaults drop in the second quarter of 2022

The delinquency rate for mortgage loans on one-to-four-unit residential properties has fallen to Seasonal rate 3.64% Among all loans due at the end of the second quarter of 2022, according to the National Payment Delinquency Survey conducted by the Mortgage Bankers Association (MBA).

For survey purposes, the MBA requires servants to report loans that are delinquent if payment is not made based on the original terms of the mortgage. The delinquency rate is down 47 basis points from the first quarter of 2022 and down by 183 basis points from a year earlier.

By 3.64 percent, The mortgage delinquency rate in the second quarter fell to its lowest level since the MBA survey began in 1979 Even after overcoming the previous pandemic, the survey was down 3.77 percent in the fourth quarter of 2019, said Marina Walsh, MBA vice president for industry analysis at the MBA. FHA, Housing Administration Cells, Conventional Loans — reported a decrease in loans that were 90 days or more past due but not in foreclosure.”

According to Walsh, of all the economic indicators that could lead to a mortgage delay, the US unemployment rate appears to be the best measure of loan performance. Despite inflationary pressures, stock market volatility, increases in mortgage rates, and two quarters of economic downturn – often known as a recession – the labor market remains incredibly strong. The unemployment rate was 3.5 percent in July — the lowest level in half a century closely approaching the record low mortgage delinquency rate.

Walsh added, “Inventory and foreclosure levels remain well below historical survey averages—a strong indication that providers are able to help delinquent borrowers find alternatives to foreclosure. These alternatives include processing, loan drills, and home sales—with Possibility to set aside equity, or cash-for-key options and an alternative instrument.”
Confirmations added

Click on the chart for a larger picture.

This graph shows the percentage of overdue loans by days past due. Overall delays in the second quarter fell to a record low.

From MBA:

Compared to the last quarter, the seasonally adjusted mortgage delinquency rate for all outstanding loans decreased to 3.64 percent, the lowest level in the survey history dating back to 1979. By stage, the 30-day delinquency rate increased by 7 basis points to 1.66 percent The 60-day overdue rate decreased by 7 basis points to 0.49 percent, and the 90-day overdue rate decreased by 47 basis points to 1.49 percent.

Late payment rate includes loans that are overdue at least once but does not include loans in the foreclosure closing process. The percentage of loans in the foreclosure process at the end of the second quarter was 0.59 percent, an increase of 6 basis points over the first quarter of 2022 and 8 basis points over the previous year. The foreclosure stock rate is still below the quarterly average of 1.43 percent dating back to 1979.

This sharp increase in 2020 in the group of 90 days was due to non-performing loans (listed as late in payment, but not reported to credit bureaus).

The percentage of loans in the foreclosure process increased in the first quarter with the end of the foreclosure moratorium.

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