Two new data reports offer mostly positive news for mortgage servicers, as foreclosure activity and delinquency rates recorded respective declines.
There was a total of 31,877 properties with foreclosure filings in July, according to new data from ATTOM. This represented a 9% drop from June but a 5% uptick from one year earlier. Nationwide, one in every 4,380 housing units had a foreclosure filing in July.
The states with the highest foreclosure rates were Maryland (one in every 2,071 housing units with a foreclosure filing); New Jersey (one in every 2,335 housing units); Delaware (one in every 2,343 housing units); Illinois (one in every 2,430 housing units); and South Carolina (one in every 2,511 housing units).
“The slight decline in foreclosure filings we are seeing is yet another sign of a rebounding housing market,” said Rob Barber, CEO at ATTOM. “With home prices back up, several factors have combined to put more financial resources in the hands of homeowners, providing more options to avoid foreclosure. However, given with the U.S. housing market remains in flux, the various forces at play could keep the market improving or turn it back downward over the coming months.”
Separately, the Mortgage Bankers Association (MBA) reported the mortgage delinquency rate on loans on one-to-four-unit residential properties dipped to a seasonally adjusted rate of 3.37% of all loans outstanding at the end of the second quarter. The delinquency rate was down 19 basis points from the first quarter of 2023 and down 27 basis points from one year ago.
MBA added that percentage of loans on which foreclosure actions were started in the second quarter fell by 3 basis points to 0.13%.
“The seasonally adjusted mortgage delinquency rate fell to its lowest level since MBA’s survey began in 1979, reaching 3.37 percent in the second quarter of 2023,” said Marina Walsh, MBA’s vice president of industry analysis. “Buoyed by a resilient job market, homeowners are continuing to make their mortgage payments.”
Walsh noted that MBA’s data analysis determined that foreclosure starts and foreclosure inventory also declined relative to the previous quarter. However, she cautioned that all was not copacetic.
“Despite low delinquency rates, there are early signs of possible consumer credit stress,” she added. “Delinquencies are rising for other forms of credit such as credit cards and car loans. In addition, FHA delinquencies rose 10 basis points compared to year ago levels. On a non-seasonally adjusted basis, FHA delinquencies rose 13 basis points year-over-year and 71 basis points from the first quarter of 2023. As the economy slows and labor market cools, homeowners with FHA loans are likely to feel the distress first.”