Mortgage delinquencies decrease in Q1 2022

According to the survey, delinquency rate for conventional loans decreased 55 basis points to 3.03% over the previous quarter, reaching the lowest level since the fourth quarter of 2019. Similarly, the FHA delinquency rate decreased 118 basis points to 9.58% – also the lowest level since the fourth quarter of 2019. The VA delinquency rate, meanwhile, decreased by 38 basis points to 4.86%, the lowest since the first quarter of 2020.

Walsh explained that this improvement in loan performance can mostly be attributed to the movement of loans that were 90-days or more delinquent. Most of these aged delinquencies were either cured or entered post-forbearance loan workouts.

The MBA survey also found that the expiration of pandemic-related foreclosure moratoriums led to a modest increase in foreclosure starts. The percentage of loans in the foreclosure process at the end of the first quarter was at 0.53%, increasing by 11 basis points from the fourth quarter of 2021 and falling one basis point from a year ago. The percentage of loans on which foreclosure actions were started in the first quarter rose by 15 basis points at 0.19%. This is still below the quarterly average of 0.41%, dating back to 1979. 

“Given the nation’s limited housing inventory and the variety of home retention and foreclosure alternatives on the table across various loan types, the probability of a significant foreclosure surge is minimal,” said Walsh. “Borrowers have more choices today to either stay in their homes or sell without resorting to a foreclosure.”

An estimated 525,000 homeowners were on forbearance plans as of March 31, 2022. The MBA asked servicers to report the loans in forbearance as delinquent if the payment was not made based on the original terms of the mortgage.