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Delinquency and Foreclosure Rates Continue to Plummet; Texas Trust CU says They've Historically Experienced Low Delinquencies
Tuesday, November 12, 2013 6:55 AM

The delinquency rate for mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 6.41 percent of all loans outstanding at the end of the third quarter of 2013, the lowest level since the second quarter of 2008. The delinquency rate dropped 55 basis points from the previous quarter, and 99 basis points from one year ago, according to the 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 third quarter was 3.08 percent down 25 basis points from the second quarter and 99 basis points lower than one year ago. This was the lowest foreclosure inventory rate seen since 2008.

Richard Whitman, vice president of residential lending with Texas Trust CU, says mortgage loan delinquencies aren’t a problem for their credit union, as they’ve historically experienced low delinquencies in their mortgage portfolio. In fact, from 2006 to 2012, the Mansfield-based credit union has had a less than percent delinquency for mortgage loans.

According to Whitman, a 2013 Credit Union Excellence in Mortgage Lending Award recipient, the credit union’s mortgage lending portfolio has grown from $61 million in 2006 to more than $180 million today. And member penetration for mortgage lending has gone from two percent to 15 percent. Whitman says the credit union’s mortgage operation generated interest income of more than $7 million and fee income of more than $1 million in 2012.

Texas Trust CU is reportedly the largest credit union mortgage lender in north Texas, and according to its CEO Jim Minge, "Our mortgage lending is just one of the many reasons members have chosen Texas Trust as their financial services partner."

Other highlights from the National Delinquency Survey:

On a seasonally adjusted basis, the overall delinquency rate decreased for all loan types. The seasonally adjusted delinquency rate decreased 46 basis points to 3.35 percent for prime fixed loans and decreased 80 basis points to 5.97 percent for prime ARM loans. For subprime loans, the delinquency rate decreased 179 basis points to 19.20 percent for subprime fixed loans and 153 basis points to 21.46 percent for subprime ARM loans. The delinquency rates for VA loans fell by 73 basis points to 5.41 percent and the FHA delinquency rate declined by 97 basis points to 10.06 percent.

The non-seasonally adjusted percent of loans in foreclosure, also known as the foreclosure inventory rate, decreased from last quarter to 3.08 percent. The foreclosure inventory rate for prime fixed loans decreased 15 basis points to 1.72 percent and the rate for prime ARM loans decreased 91 basis points from last quarter to 4.54 percent. For subprime loans, the rate for subprime fixed loans decreased 90 basis points to 8.99 percent and the rate for subprime ARM loans decreased 115 basis points to 16.45 percent. The foreclosure inventory rate for FHA loans decreased 32 basis points to 3.36 while the rate for VA loans decreased 7 basis points to 1.81 percent.

The non-seasonally adjusted foreclosure starts rate decreased 21 basis points for prime ARM loans to 0.60 percent, 12 basis points for subprime fixed to 1.86 percent, 34 basis points for subprime ARM loans to 2.91 percent, four basis points for FHA loans to 0.77 percent and three basis points for VA loans to 0.44 percent. The foreclosure start rate remained unchanged from last quarter for prime fixed loans at 0.33 percent.