Both the rate of delinquencies and the share of residential mortgage loans in foreclosure dropped during the third quarter, while the percentage of loans on which foreclosures were started rose.
The seasonally adjusted rate of delinquent one- to four-unit residential mortgage loans stood at 9.13% at September 30, down 72 basis points from the second quarter and 51 basis points from the third quarter of last year, according to data from the Mortgage Bankers Association released Thursday.
The percentage of loans in the foreclosure process at the end of the quarter was 4.39%, down 18 basis points from the prior quarter and down 8 basis points from the 2009 third quarter, the MBA said.
Meanwhile, foreclosure actions were started on 1.34% of mortgage loans, an increase of 23 basis points from the previous quarter, but down 8 basis points from a year earlier. Foreclosure starts increased on all loan types, the MBA said, but set a record high on prime fixed loans.
Michael Fratantoni, the MBA's vice president of research and economics, attributed the increase in foreclosures on prime, fixed-rate, "plain vanilla" loans primarily to the high unemployment rate, which currently stands at 9.6%.
"Most often homeowners fall behind on their mortgages because their income has dropped due to unemployment or other cases," he said in a press release.
The increase also speaks to the changing composition of the mortgage market, he said. Currently, prime fixed-rate loans and Federal Housing Administration loans make up nearly 80% of loans outstanding that are included in the survey, and account for more than half of the foreclosures started during the quarter, compared with 39% a year earlier. Subprime and prime adjustable-rate mortgages make up a much smaller portion of overall loans.
The robo-signing scandal of this fall, and the subsequent temporary moratoriums on foreclosures imposed by many large servicers, did not have a profound impact on the third-quarter numbers, Fratantoni said during a call with reporters Thursday. Instead, the effects of such moves will likely be felt more in the quarters to come.
"We don't think we're seeing any impact of the moratoriums in the third quarter numbers," he said. "But we certainly think it could impact the foreclosure rate in the fourth quarter of this year and into the first quarter of 2011."