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FHA Foreclosure & Delinquency Levels Fall

by Peter G. Miller
June 5th, 2008

The foreclosure mess keeps getting worse — but in the world of FHA mortgages the good news is that foreclosure levels are down.

According to figures just released by the Mortgage Bankers Association, “the percentage of loans in the foreclosure process was 2.47 percent at the end of the first quarter, an increase of 43 basis points from the fourth quarter of 2007 and 119 basis points from one year ago.”

However, if you break out the numbers by loan type then you can see that FHA foreclosure levels have declined:

___Prime fixed rate loan foreclosure starts increased 7 basis points to 0.29 percent over the previous quarter and prime ARM foreclosure starts increased 49 basis points to 1.55 percent.

___Subprime fixed foreclosure starts increased 28 basis points to 1.80 percent and subprime ARM foreclosure starts increased 106 basis points to 6.35 percent.

___FHA foreclosure starts decreased 4 basis points to 0.87 percent and VA foreclosure starts increased 11 basis points to 0.39 percent.

Not all homes in the “process of foreclosure” will be sold on the courthouse steps. Some owners will bring loans current, some will be able to modify loan terms and some will sell before the property can be foreclosed.

In terms of delinquencies, the MBA reports that:

“The seasonally adjusted delinquency rate increased 47 basis points for prime loans (from 3.24 percent to 3.71 percent) and 148 basis points for subprime loans (from 17.31 percent to 18.79 percent). The delinquency rate decreased 33 basis points for FHA loans (from 13.05 percent to 12.72 percent) and increased 73 basis points for VA loans (from 6.49 percent to 7.22 percent).

“The foreclosure inventory rate increased 26 basis points for prime loans (from 0.96 percent to 1.22 percent), and increased 209 basis points for subprime loans (from 8.65 percent to 10.74 percent). FHA loans saw a six basis point increase in foreclosure inventory rate (from 2.34 percent to 2.4 percent), while the foreclosure inventory rate for VA loans increased 12 basis points (from 1.12 percent to 1.24 percent).”

How the FHA foreclosure inventory rate can rise when foreclosure and delinquency levels are down is unclear to me.

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This entry was posted on Thursday, June 5th, 2008 at 6:03 pm and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

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