This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Mortgage Defaults, Foreclosure Rates Moving Toward Normal: MBA

NEW YORK ( TheStreet) -- Mortgage default rates and foreclosure levels have returned to more normal historical levels, according to the Mortgage Bankers' Association's quarterly National Delinquency Survey.

The delinquency rate for one-to-four unit residential mortgages fell to 6.96%, its lowest level since mid-2008. That is down 62 basis points or 0.62 percentage points from a year earlier.

The delinquency rate includes loans that are at least one month's payment past due but not in foreclosure.

The percentage of loans on which fresh foreclosure action was taken fell to 0.64% from 0.7%, the lowest level since the first quarter of 2007.

The percentage of loans in the foreclosure process at the end of the second quarter was 3.33%, down 22 basis points from the first quarter and 94 basis points from a year earlier.

Overall, the percentage of loans that were at least one payment past due or in foreclosure was at its lowest level in five years, decreasing to 10.13% on a non-seasonally adjusted basis, down 149 basis points from a year earlier.

"For most of the country, delinquencies and foreclosures have returned to more normal historical levels," according to Jay Brinkman, MBA's chief economist. "Most states are at or only slightly above longer-term averages, and some of the worst-hit states are showing improvement. For example, while 10% of the mortgages in Florida are somewhere in the process of foreclosure, this is down considerably from the high of 14.5% two years ago."

States where foreclosures need to be approved in court continue to account for a disproportionate share of foreclosures. The foreclosure inventory rate in so-called judicial states averaged 5.59%, triple that of the 1.86% in non-judicial states. Judicial states with the longest foreclosure backlogs include Florida, New Jersey, New York and Illinois.

The strong improvement in mortgage default rates has benefited banks significantly, with banks such as Wells Fargo (WFC - Get Report), Bank of America (BAC - Get Report), JPMorgan Chase (JPM - Get Report) and more recently Citigroup (C - Get Report)releasing mortgage loan loss reserves that had been set aside for future defaults. P/> -- Written by Shanthi Bharatwaj in New York.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BAC $12.95 0.00%
C $39.86 0.00%
JPM $57.75 0.00%
WFC $47.86 0.00%
AAPL $94.02 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs