Delinquencies Take Another Dive by Aly Yale

Delinquencies, foreclosures, and homes in negative equity are continuing to free fall, according to the Urban Institute’s Housing Finance at a Glance monthly chartbook. Shares of all three declined over the quarter and the year.

According to the chartbook, ever-rising home prices are playing a big role in the continuing decline of underwater mortgages.

“With housing prices continuing to appreciate, residential properties in negative equity (LTV greater than 100) as the share of all residential properties with a mortgage continued to decline and stood at 6.1percent as of Q1 2017,” the Urban Institute reported. “Residential properties in near negative equity (LTV between 95 and 100) comprise another 1.6 percent.”

Serious delinquencies were also down for the quarter, with 90-day delinquencies dropping to 1.37 percent. In Q4 2016, they stood at 1.6 percent.

The share of loans in some stage of foreclosure declined to 1.39 percent, while total combined delinquencies dipped to 2.76 percent—down from 3.13 percent last quarter and 3.29 percent last year.

Delinquency rates on Fannie Mae and Freddie Mac loans experienced declines as well, with just 1.01 percent of Fannie’s portfolio and 0.85 percent of Freddie’s in serious delinquency as of June.

“Serious delinquency rates of GSE loans continued to decline as the legacy portfolio is resolved and the pristine, post-2009 book of business exhibits very low default rates,” the Urban Institute reported.

According to the chartbook, GSE delinquency rates are still higher than they were pre-crisis, but FHA and VA delinquencies have finally dipped below that point. Serious delinquencies on VA loans are at 2.13 percent, while 3.99 percent of FHA loans are seriously delinquent.

Delinquencies may be down, but mortgage insurance activity is up, according to the chartbook. Private MI activity rose from $159 billion to $177 billion for the quarter. Private insurers made up the bulk of the quarter’s market, accounting for 40 percent of all activity. FHA comprised 37 percent, while VA accounted for just 23 percent—down from 27 percent in Q1.