Mortgage delinquencies have fallen to pre-recession levels, while the rate of new foreclosures is at its lowest level in more than six years, according to new figures from the Mortgage Bankers Association (MBA).
The percentage of mortgages at least one payment past due fell to a seasonally adjusted rate of 6.96 percent in the second quarter of the year, down from 7.25 percent at the end of the first quarter and 7.58 percent one year ago. That's the lowest since mid-2008. The figures do not include loans in foreclosure.
The rate of foreclosure starts fell to 0.64 percent of all loans, the lowest since the first quarter of 2007 and down from a high of 1.46 percent in September 2009. Mortgages in foreclosure were 3.33 percent of all homes with mortgages, down from 3.55 percent in the first quarter and 4.27 percent one year ago.
Big drop in serious delinquencies
Seriously delinquent mortgages - those at least 90 days past due or in foreclosure - dropped to 5.88 percent of all mortgages, a decline of 51 basis points from the previous quarter, or more than half a percentage point. That's down from 7.31 percent at the end of the second quarter of 2012, a one-year drop of nearly one and a half percentage points.
However, the MBA notes the actual decline in seriously delinquent loans may be less than stated, due to the fact that a large number of loans were obtained by a specialty mortgage servicer that does not participate in the survey.
"For most of the country, delinquencies and foreclosures have returned to more normal historical levels," said Jay Brinkmann, MBA chief economist. "Most states are at or only slightly above longer-term averages, and some of the worst-hit states are showing improvement."
He noted that while Florida continues to lead the nation in the number of foreclosure starts, its rate of 1.1 percent new foreclosures is half what it was three years ago and the lowest since 2007. About 10 percent of all Florida mortgages are in foreclosure, down about one-third from their high of two years ago.
Foreclosures worsen in New York, New Jersey
At the same time, the foreclosure picture is worsening in a handful of states. The rate of new foreclosures in New York rate hit an all-time high in the second quarter of the year and is now on par with Florida's. The percentage of mortgages in foreclosure in New Jersey is about the same as that in California, Arizona and Nevada, three of the states that were hit hardest by the crash in the housing market.
As might be expected, states that require a judicial foreclosure process - that is, all foreclosures must be conducted through the courts - have a higher backlog of foreclosures than states that use a more expedited non-judicial process. The average rate of mortgages in foreclosure in judicial foreclosure states was 5.59 percent in the second quarter of the year, according to the MBA, compared to 1.86 percent in non-judicial states that have cleared out their backlogs more quickly.