Delinquencies, foreclosure starts increase in first quarter

The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 10.06 percent of all loans outstanding in the first quarter, up 59 basis points from the fourth quarter, and up 94 basis points from one year ago, according to the recently released Mortgage Bankers Association’s (MBA) National Delinquency Survey.

The delinquency rate includes loans that are at least one payment past due, but does not include loans in the process of foreclosure.  The percentage of loans in the foreclosure process at the end of the first quarter was 4.63 percent, an increase of five basis points compared with the fourth quarter of 2009 and 78 basis points from one year ago.

“Delinquency rates traditionally peak in the fourth quarter and fall in the first quarter and we saw that first quarter drop in the data,” said Jay Brinkmann, MBA’s chief economist.  “The question is whether the drop represents anything more than a normal seasonal decline or a more fundamental improvement.  Most importantly, the normal seasonal drop is coming right at the point where we believe delinquencies could potentially be declining and the problem for the statistical models is determining which is which.”