–Retransmitting 13:49 ET Story, Correcting Headline
–Percent Of Loans In Foreclosure Increase Due To Processing Delays

By Ian McKendry

WASHINGTON (MNI) – The delinquency rate of one-to-four-unit
residential mortgages fell 91 basis points 8.22% seasonally
adjusted in the fourth quarter compared to the third, making total
delinquencies at their lowest level since 2008 the Mortgage Bankers
Association reported Thursday.

While the MBA said there were “broad decreases” in mortgage
delinquencies, it also reported the percent of loans in foreclosure
increased 24 basis points from 4.39% to 4.63% not seasonally adjusted,
largely due to paperwork issues in September and October which caused
delays in the foreclosure process.

“The reason foreclosures are going up are delays in the process,”
Jay Brinkman the MBA’s chief economist said on a conference call with
reporters Thursday.

Brinkman said five states — Florida, California, Illinois, New
York, and New Jersey — make up more than 50% of all loans in
foreclosure with Florida taking the lions’ share at 23%.

Brinkman also noted that four of those five states, with California
being the exception, have a judicial foreclosure process where he said
the MBA has seen the longest delays in the foreclosure process.

“I’d much rather prefer to have our current situation in which
delinquencies are falling,” Brinkman said when comparing the falling
delinquency rate versus the increase in foreclosure inventory, adding
“the inventory issues are explainable.”

The report also said loans one payment past due fell from 3.36% to
3.25% seasonally adjusted making it the lowest level since the end of
2007 and the 90+ day delinquency rate, which Brinkman called the most
important, fell from 4.34% to 3.63% seasonally adjusted in the fourth
quarter.

Mike Fratantoni, the MBA’s vice president for single family
research who was also on the call with Brinkman, said one concern in the
report was the increase in the delinquency rate for Federal Housing
Administration loans — with the not seasonally adjusted rate increasing
from 13.22% to 13.28% in fourth quarter.

“This is important to note here, because the FHA category has
really grown substantially over the past year,” Fratantoni said, adding
that the FHA category has increased by almost a million loans over the
past year.

“With such a large cohort of young loans it is surprising it is
going up,” Fratantoni said.

However, Fratantoni said overall it was a good report “you see a
very consistant pattern, whether you are looking at primed fixed, prime
arm, or subprime, with very significant drops in delinquencies
particularly in that 90+ category.”

Brinkman said the sample size of loans covered in the survey, which
is 43.6 million, decreased by 389,000 in the fourth quarter because
November and December are “very active” refinancing months and
refinanced loans disappear from the servicers’ books and are held in
interim servicing.

On a seasonally adjusted year-over-year basis total mortgage
delinquencies fell from 9.47% to 8.22% and unadjusted delinquencies
year-over-year fell from 10.44% to 9.39%.

Foreclosure inventory not seasonally adjusted fell from 4.58% year
over year to 4.63%.

The Mortgage Bankers Association will release their National
Delinquency Survey for the first quarter of 2011 in May.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$$AG$,M$U$$$,M$$CR$,MAUDS$]