VA, FHA loan delinquencies posted the steepest decline in over 40 years in Q2

Seasonally adjusted delinquencies for certain government-insured or guaranteed home loans saw the steepest drop in the history of the Mortgage Bankers Association survey during the second quarter, when late payments also saw wider drops.

The drop in a consecutive quarter to 12.77% from 14.67% for loans insured by the Federal Housing Administration, and to 6.47% from 7.62% for mortgages guaranteed by the Department of Housing Affairs. Veterans came when overall delinquencies fell to 5.47% from 6.38%, marking a low not seen since the first quarter of last year.

Like FHA and VA loans, mortgages 90 days or more behind experienced a record decline, dropping 72 basis points to 3.53% between the first and second quarters. A year ago, the seasonally adjusted general delinquency rate for the second quarter was 8.22%. The equivalents for FHA and VA loans, respectively, were 15.65% and 8.05%.

The fact that there have been marked drops even in loans that have had higher levels of pandemic-related distress or long-term difficulties reinforce other indicators that suggest that the market could normalize if infection rates stay content.

“It appears that later stages of delinquency borrowers are on the mend due to a number of factors, including improved employment and other economic conditions, the availability of post-forbearance home retention solution options, and a market robust real estate offering additional alternatives to distressed homeowners. ” Marina Walsh, vice president of MBA industry analysis, said in a press release.

Any loan in which the borrower did not make the payment as stipulated in the contract, including exonerated mortgages, was considered delinquent for the purposes of this survey. Foreclosures were excluded from the delinquency rates. The association has been tracking delinquency rates since 1979.

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