FHA and VA delinquencies saw the steepest decline in 40+ year during 2Q

Seasonally adjusted delinquencies for certain government-insured or guaranteed home loans underwent the steepest plunge seen in the history of the Mortgage Bankers Association’s survey during the second quarter, when late payments also experienced broader declines.The consecutive-quarter drop to 12.77% from 14.67% for Federal Housing Administration-insured loans, and to 6.47% from 7.62% for Department of Veterans Affairs-guaranteed mortgages occurred as overall delinquencies fell to 5.47% from 6.38%, marking a low not seen since the first quarter of last year.Like FHA and VA loans, mortgages late by 90 days or more experienced a record decline, falling 72 basis points to 3.53% between the first and second quarters. The seasonally adjusted overall delinquency ratio for the second quarter was 8.22% a year ago. The equivalents for FHA loans and VA loans were 15.65% and 8.5%, respectively. This is a significant improvement over the 8.22% seen a year ago. “It appears that borrowers who are in the later stages of delinquency have recovered due to several factors including improved employment, better economic conditions, the availability and strength of the housing market that is offering additional options to distressed homeowners,” Marina Walsh, the MBA’s vice-president of industry analysis, stated in a press release. Any loan where the borrower failed to make the contractually obligated payment, including forborne mortgages was considered delinquent. Delinquency rates did not include foreclosures. Since 1979, the association has been keeping track of delinquency rate.