Mortgage bank delinquencies fall but still higher than at credit unions
Data released November 7 by the Mortgage Bankers Association (MBA) show delinquency rates at a five-year low, but debtors who borrow from credit unions are still significantly less likely to find themselves in arrears.
The MBA's National Delinquency Survey found that the seasonally adjusted third-quarter delinquency rate for mortgage loans declined to 6.41%, the lowest since the second quarter of 2008.
That is more than 5% higher than delinquency rates among similar credit union-originated loans. According to the Credit Union National Association's (CUNA’s) Monthly Credit Union Estimates for September, the 60-day delinquency rate for all loans issued by credit unions was 1% for the seven months prior. The delinquency rate in June for all mortgages loans issued by credit unions, according to CUNA, was 1.3%--1.36% for first-time mortgages, and 1.07% for home equity lines of credit and second mortgages.
While the data issued by CUNA and the MBA are not directly comparable, they still indicate that credit union members have an easier time repaying mortgage loans than retail bank customers do.
The recent MBA data showed that the percentage of loans in the foreclosure process, at 3.08%, was even higher than the delinquency rate on any credit union mortgage loan. And while the MBA "serious delinquency rate"--the percentage of loans either with payments 90-days late or already in foreclosure--is down 1.38% over the last year, it's still at 5.65%.
The MBA also noted that the survey's delinquency rates might appear lower than they actually are because one large mortgage servicer does not participate in its survey.
Foreclosures are slowing down throughout the housing market, according to the MBA survey. The percentage of loans starting the foreclosure process fell by 0.03% in the third quarter to 0.61%--the lowest level since early 2007.
The MBA said that bank managers might find themselves issuing more pink slips as a result.
"Many mortgage servicers are already reducing staffs that handled delinquent loans and foreclosures, and we expect that trend to continue as the numbers continue to fall," said MBA Chief Economist Jay Brinkmann.
The MBA National Delinquency Survey has been conducted quarterly since 1972. It covers 40 million loans on one-to-four unit residential properties, which constitute more than four-fifths of all first-lien residential mortgage loans outstanding in the U.S.