During the fourth quarter the national delinquency rate for home loans jumped 89 basis points — the biggest three-month increase in more than 35 years — to a record 7.88% at yearend, the Mortgage Bankers Association said Thursday.
The rate includes both prime and subprime mortgages that are 30 days or more past due.
Subprime delinquencies surged 185 basis points, to a staggering 21.88%, the trade group said.
The portion of prime loans in the process of foreclosure nearly doubled from a year earlier, to 1.88%. The one bright spot in the numbers was that foreclosure starts were flat, at 1.08% of all loans. However, Jay Brinkmann, the MBA's chief economist said that was "mainly attributable to various state and local moratoria on foreclosure sales" and freezes placed by Fannie Mae and Freddie Mac on foreclosures and evictions in November.
Such freezes are "really driving a buildup in the 90-day or more [past due] bucket," Brinkmann said during a conference call Thursday. "More loans are being held in that bucket, as opposed to what is being sent into foreclosure."
The percentage of mortgages that were seriously delinquent or in foreclosure climbed 268 basis points from a year earlier and 113 basis points from the end of the third quarter, to 6.3%.
For subprime mortgages, this figure skyrocketed 867 basis points from a year earlier and 355 basis points from Sept. 30, to 23.11%.
The highest delinquency rates were posted in the South (9.4%) and the Midwest (8.58%), according to the trade group.
Brinkmann said he expects the Obama administration's foreclosure prevention efforts "will be beneficial" to the delinquency and foreclosure rates this year, though the benefit will be difficult to quantify.
The share of subprime adjustable-rate mortgages that were 30 to 60 days past due dropped 134 basis points from the end of the first quarter, to 8.19%, their lowest level since the first quarter of 2007.
The drop showed "a shift away from delinquencies tied to the structure and underwriting quality of loans to mortgage delinquencies caused by job and income losses," Brinkmann said. "Absent a sudden increase in short-term rates, this trend should continue," because the last subprime ARMs that carried a fixed payment for two years before adjusting were written in the first half of 2007.
"The problem with initial resets is largely behind us, although the impact of the resets was generally overstated," he said. Also, "the delinquency rates continue to climb across the board for prime fixed-rate and subprime fixed-rate loans, … whose performance is driven by the loss of jobs or income, rather than changes in payments."
Figures compiled by National Mortgage News show that Americans owe $9.6 trillion on their loans. The MBA's figures would indicate that $756 billion of residential mortgage debt is delinquent, including $196 billion of subprime debt.