Fannie Mae Mortgage Serious Delinquency Rate is Down

7.30.2016 | Fannie Mae Mortgage Serious Delinquency Rate is Down by Rusty Tweed team

Serious Delinquency Rate is Down by Rusty Tweed team

Today, Fannie Mae Mortgage reported that the Single-Family Serious Delinquency rate had declined in May to 1.38%, down from the April figures of 1.40%. The serious delinquency rate is down from 1.70%.

These statistics relate to mortgage loans that are “three monthly payments or more past due or in foreclosure”. This rate is the lowest since June 2008.

In February 2010, the Fannie Mae serious delinquency rate peaked at 5.59%; but has been generally declining since. It has fallen 0.32 percentage points over the last year, but at that pace, the serious delinquency rate will not be below 1% until the second half of 2017. The “normal” serious delinquency rate is under 1%.

The heightened delinquency rate is mostly a result of older loans as the lenders continue to work through a backlog.

Lowered Mortgage Delinquency Rates Linked to Lower Unemployment Rates

The seasonally adjusted delinquency rate for U.S. wide loans on one-to-four unit residential properties is 4.77%. This is 77 basis points lower than a year ago, and its lowest in almost a decade, according to the National Delinquency Survey.

According to Bloomberg news, U.S. mortgage delinquencies have closely followed the unemployment rate since the financial crisis in 2008.

A 2015 working paper for the National Bureau of Economic Research, titled “Can’t Pay or Won’t Pay? Unemployment, Negative Equity and Strategic Default,” a group of researchers led by the Federal Reserve Bank of Atlanta attempted to understand the factors behind some homeowners being more likely to default than others.

The findings show a similar assessment to that exhibited by Bloomberg news.  Heads of household who had defaulted on their loans exhibited a 21% unemployment rate compared to an overall unemployment rate of 6%. In these households, spouses had a 31% unemployment rate, compared to 13% in households that paid their mortgages.

References for Fannie Mae Mortgage Serious Delinquency Rate is Down by Rusty Tweed team

http://www.bloomberg.com/news/articles/2016-05-12/mortgage-delinquency-rate-in-u-s-closely-tracks-jobless-chart

http://www.nber.org/papers/w21630

http://www.calculatedriskblog.com/2016/06/fannie-mae-mortgage-serious-delinquency.html