Mortgage Bankers See More Foreclosures, But Fewer Delinquencies

More

The Mortgage Bankers Association released its fourth-quarter data today. As you might expect, the percentage of loans in foreclosure increased -- to 4.58%, from 4.47% in the third quarter. That's the bad news. The good news is that delinquencies declined to a seasonally adjusted percentage of 9.47% from 9.64% in Q3. Should we treat this data as a generally positive for housing's recovery? The MBA thinks so.

Foreclosures are a lagging indicator of housing market health, while delinquencies are a leading indicator. That's why the MBA thinks the decline in delinquencies should carry more weight than the increase in foreclosures. Jay Brinkmann, MBA's chief economist says:

"The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight. We normally see a large spike in short-term mortgage delinquencies at the end of the year due to heating bills, Christmas expenditures and other seasonal factors. Not only did we not see that spike but the 30-day delinquencies actually fell by 16 basis points from 3.79 percent to 3.63 percent. Only three times before in the history of the MBA survey has the non-seasonally adjusted 30-day delinquency rate dropped between the third and fourth quarter and never by this magnitude. If the normal seasonal patterns hold for the first quarter, we should see an even steeper drop in the end of March data.

Let's hope he's right. But it can really only be interpreted as a good sign that delinquencies are declining. The big question is whether this trend will continue into future quarters.

As far as the states still suffering, Florida and Nevada continue to feel the most pain. Brinkmann also says:

"Florida continues to be the worst state in terms of delinquencies with 26 percent of Florida mortgages one payment or more past due as of December 31st. 20.4 percent of Florida mortgages are 90 days or more past due or already in the process of foreclosure. Nevada is the second worst state with 24.7 percent of its mortgages one payment or more past due and 19 percent 90 days or more past due or in foreclosure.

It's kind of incredible to try to imagine that one-out-of-four homeowners with mortgages in an entire state could be having trouble making their payments. But that's the reality Florida and Nevada both face. And what's even worse is that one-in-five have defaulted, which usually means those borrowers face losing their homes, unless they manage to modify their mortgages.

The conclusion I draw from this news is pretty straightforward. Things were still pretty awful last quarter in housing, but there's reason to be cautiously optimistic about the future.

Jump to comments
Presented by

Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
Get Today's Top Stories in Your Inbox (preview)

A Technicolor Time-Lapse of Alaska's Northern Lights

The beauty of aurora borealis, as seen from America's last frontier


Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register. blog comments powered by Disqus

Video

A Time-Lapse of Alaska's Northern Lights

The beauty of aurora borealis, as seen from America's last frontier

Video

What Do You Wish You Learned in College?

Ivy League academics reveal their undergrad regrets

Video

Famous Movies, Reimagined

From Apocalypse Now to The Lord of the Rings, this clever video puts a new spin on Hollywood's greatest hits.

Video

What Is a City?

Cities are like nothing else on Earth.

Video

CrossFit Versus Yoga: Choose a Side

How a workout becomes a social identity

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Writers

Up
Down

More in Business

Just In