MBA: Q2 delinquency and foreclosure rates rise again

The Mortgage Bankers Association released data on second quarter mortgage delinquencies and foreclosures this morning. Here’s what we learned:

* The overall mortgage delinquency rate inched up to 9.24% in Q2 2009 from 9.12% in Q1 2009 and 6.41% a year earlier. At the risk of sounding like a broken record, this is yet another record high for the delinquency rate (the MBA data goes back to 1972).

* The subprime DQ rate climbed to 25.35% from 24.95% a quarter earlier and 18.67% a year earlier. The prime-only DQ rate rose to 6.41% from 6.06% in Q1 2009 and 3.93% a year earlier. This shows that late payments have migrated up the mortgage food chain.

What’s also worth noting: FHA delinquencies are starting to rise. The DQ rate there hit 14.42% in Q2 2009, up from 13.84% in Q1 2009 and 12.63% a year earlier. The FHA program has become the “go to” place for borrowers who previously might have taken out subprime or Alt-A loans. Only time will tell if the government is making a wise choice by keeping FHA standards so lenient in the midst of the worst housing downturn on record.

* The percentage of mortgages entering the foreclosure process inched down to 1.36% from 1.37% a quarter earlier (That was a record high). The overall percentage of mortgages in any stage of foreclosure spiked to 4.3% from 3.85% a quarter earlier. This is a fresh record.

* Regionally, delinquency rates were the highest in Mississippi (13.04%), Nevada (12.14%), Michigan (11.57%), and Indiana (11.14%). The Dakotas had the lowest DQ rates (3.76% in North Dakota, 4.13% in South Dakota).

Mortgage performance continues to disappoint. Delinquencies and foreclosures set yet another record high in the second quarter, with just over 13% of U.S. loans in some stage of distress. That’s a testament to the depth and breadth of the housing collapse.

Still, there are a few glimmers of hope. Thirty-day delinquency rates actually ticked down a bit in a few categories, and the percentage of properties entering the foreclosure process has stabilized. These could be early reflections of stabilization in the economy and certain housing markets. The push toward increased modifications as an alternative to foreclosure is another likely contributor.

If we continue to see gradual improvement in the U.S. housing market, we’ll see gradual improvement in late payment and foreclosure rates, albeit with a lag. Policymakers probably have their fingers crossed.

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