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Delinquencies And Foreclosures Increase Slightly In Second Quarter 2002

September 9, 2002

WASHINGTON, D.C. (September 9, 2002) — The percent of homeowners paying their mortgages late increased in the second quarter of 2002. This increase occurred for all loan types, but the increase was lower for conventional loans as opposed to FHA and VA loans -- according to the latest quarterly National Delinquency Survey conducted by the Mortgage Bankers Association of America (MBA).

Explains Doug Duncan, MBA's Chief Economist, "The increase in delinquencies is due mainly to the increase in unemployment that occurred from the first quarter to the second quarter of this year. In the first quarter, unemployment averaged 5.6 percent, but increased to an average of 5.9 percent in the second quarter. One year ago, in the second quarter of 2001, unemployment averaged 4.5 percent."

The overall seasonally adjusted delinquency rate for loans on one- to four-unit residential properties was 4.77 percent in the second quarter of 2002, up 12 basis points from the first quarter of 2002. The percentage of loans in the process of foreclosure at the end of the quarter rose 13 basis points to 1.23 percent, and the percentage of loans in which foreclosure started during the quarter increased 3 basis points to 0.40 percent.

For the second quarter of 2002, the seasonally adjusted delinquency rate for conventional loans was 3.10 percent, up 6 basis points from the previous quarter, and the rates for FHA and VA loans were 11.81 percent and 8.00 percent—up 58 and 19 basis points—respectively. In addition, the inventory of loans in the process of foreclosure at the end of the quarter increased for each of the loan types. The percentage of conventional loans in foreclosure increased 6 basis points to 0.87 percent. The percentage of FHA loans in foreclosure increased 47 basis points to 2.79 percent. The percentage of VA loans in foreclosure increased 31 basis points to 1.72 percent.

The National Delinquency Survey found that the delinquency rate for fixed-rate mortgages (FRMs) rose 11 basis points to 4.03 percent and for adjustable-rate mortgages (ARMs), rose 34 basis points to 6.06 percent.

"Overall, on a year-over-year basis, mortgage delinquencies are up 13 basis points over the second quarter of 2001," says Duncan. "And the percentage of loans in the foreclosure process are up 32 basis points over the second quarter of 2001, and these changes are consistent with the changes in the unemployment rate since early 2001. We currently expect delinquencies to remain near their current level for the next few quarters."

Source: Mortgage Bankers Association

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