From the MBA 4Q Delinquency Survey:
The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 4.95 percent of all loans outstanding in the fourth quarter of 2006 on a seasonally adjusted (SA) basis, up 28 basis points from the third quarter, and up 25 basis points from one year ago, according to MBA's National Delinquency Survey.
The increase was driven by increases in delinquencies for all major loan types, most notably for subprime and FHA loans. Delinquency rates for prime, subprime, FHA, and VA loans increased on a seasonally adjusted basis relative to the third quarter. The delinquency rate for FHA loans reached a new record in the fourth quarter.
The percentage of loans in the foreclosure process was 1.19 percent of all loans outstanding at the end of the fourth quarter, an increase of 14 basis points from the third quarter of 2006, while the SA rate of loans entering the foreclosure process was 0.54 percent, eight basis points higher than the previous quarter and a record high. Compared with the fourth quarter of 2005, the percentage of loans in the foreclosure process was up 20 basis points while the percentage of loans entering the foreclosure process was up 12 basis points.
The SA delinquency rate increased during the fourth quarter for all loan types. The delinquency rate increased 13 basis points for prime loans (from 2.44 percent to 2.57 percent), 77 basis points for subprime loans (from 12.56 percent to 13.33 percent), 66 basis points for FHA loans (from 12.80 percent to 13.46 percent), and 24 basis points for VA loans (from 6.58 percent to 6.82 percent).
All adjustable rate (ARM) as well as fixed rate (FRM) loans had higher SA delinquency rates compared to the third quarter of 2006. Delinquency rates in the fourth quarter increased 33 basis points for prime ARM loans (from 3.06 percent to 3.39 percent) and increased 122 basis points for subprime ARMs (from 13.22 percent to 14.44 percent). The SA delinquency rate for prime fixed loans increased 17 basis points (from 2.10 to 2.27 percent), while the rate increased 50 basis points for subprime fixed loans (from 9.59 percent to 10.09 percent).
During the fourth quarter of 2006, the foreclosure inventory rate increased for prime loans and subprime loans and decreased for FHA loans and VA loans. The foreclosure inventory rate increased six basis points for prime loans (from 0.44 percent to 0.5 percent) and 67 basis points for subprime loans (from 3.86 percent to 4.53 percent). The foreclosure inventory rate decreased nine basis points for FHA loans (from 2.28 percent to 2.19 percent) and eleven basis points for VA loans (from 1.12 percent to 1.01 percent).
By loan type, the foreclosure start rate increased five basis points for prime loans (from 0.19 percent to 0.24 percent), 18 basis points for subprime loans (from 1.82 percent to 2 percent), 14 basis points for FHA loans (from 0.79 percent to 0.93 percent), and two basis points for VA loans (from 0.32 percent to 0.34 percent).
In the fourth quarter of 2006, the percent of loans that were seriously delinquent, which is defined as the NSA percentage of loans that are 90 days or more delinquent or in the process of foreclosure, was 2.21 percent, 21 basis points higher than for the third quarter of 2006. This measure is designed to account for inter-company differences on when a loan enters the foreclosure process.
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Now is it any surprise subprime companies are losing their shirts faster than a stripper in Vegas? The statistic that outshined everything else was the astronomical difference in rates between similar subprime vs prime loan types. This has not been accounted for in the media nor the markets as everyone is throwing the baby out with the bath water. When is it news that people that didn't pay bills in the past can't pay them now? Ah, before we provide any solutions, please click on the link and read the section in bold on the MBA page. The pure golden truth.
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