The Mortgage Brokers Association released the results of their National Delinquency Survey for the third quarter of 2008 last Friday. The seasonally adjusted delinquency rate for mortgages on one-four unit residential properties was at 6.99%, up from 6.41% in the previous quarter and up from 5.59% a year ago. This is the highest on record since the survey began in 1979. Foreclosures started were at 1.07% down from 1.08% in the previous quarter and 0.78% a year ago. The percentage of loans in the foreclosure process for the third quarter was 2.97%, up from 2.75% in the previous quarter and 1.69% a year ago. 9.96% of all loans are now delinquent or in the foreclosure process.
Subprime delinquencies rose to 20.03% from 18.67% in the previous quarter and 16.31% a year ago. However, delinquencies are not confined to subprime, prime mortgage delinquencies rose to 4.34% up from 3.93% in the second quarter of 2008 and 3.12% in the third quarter of 2007. Prime delinquencies averaged 2.37% from 2003 - 2006.
Last month, the Federal Financial Institutions Examination Council (FFIEC) released their statistics on mortgage and consumer loan delinquencies. Their definition of a 30 day late is a loan that is over 30 days late when the bank reports (page 501 on this manual). For example if a loan had a March 1st due date and payment was not received by March 31st, then the MBA survey would count that as 30 days late. The FFIEC report would count not count that as "over" 30 days late. If they payment was not received by April 30, then the FFIEC methodology would count that as over 30 days late but not "over" 60 days late. Therefore, the FFIEC numbers for a 30 day late are in between the MBA's 30 day and 90 day delinquency numbers. Nevertheless, the FFIEC delinquencies are showing similar spikes up to the MBA 30 and 90 day delinquencies. Consumer loan delinquencies rose but at a slower pace in the third quarter. Consumer delinquencies spiked up during the last two recessions and did not start to fall until after the recession ended.
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