Mortgage delinquencies dropped to the lowest level since 2008 in the third quarter while the amount of loans entering foreclosure increased, according to the Mortgage Bankers Association.
The seasonally adjusted delinquency rate fell to 7.99% in the third quarter from 8.45% in the previous period. Last year, the rate was at 9.43%.
The MBA said 1.08% of loans were in foreclosure during the third quarter, up from 0.96% in the prior three months. The foreclosure rate is still down from 1.34% one year ago as mortgage servicers restart the process frozen last year to correct fraudulent documentation practices. However, foreclosures are rebooting sporadically across the country.
“While the delinquency picture changed for the better in the third quarter, the foreclosure data indicated that we are not out of the woods yet and that the issues continue to vary by geography,” said Michael Fratantoni, vice president of research and economics. “The increase in the foreclosure starts rate this quarter was driven by large increases from just a few servicers, concentrated in certain ‘hardest hit’ states.”
The amount of serious delinquencies and early delinquencies both increased, due to a still weak job market, Frantantoni said.
The percentage of loans either one payment past due or in foreclosure was 12.63% in the third quarter, up 9 basis points from the previous period but still down more than a full percentage point from last year.
The serious delinquency rate, or those mortgages at least 90 days past due or in the foreclosure process reached 7.89%, up 4 bps from the prior quarter but down from 7.08% last year.