Related Document(s):
	MBA National Delinquency Survey Mechanics

The percentage of loans in the foreclosure process was 1.12 percent at the end of the fourth quarter, a drop of 17 basis points from the previous year and a drop of 2 basis points from the third quarter of 2004. This rate was the lowest since the third quarter of 2000. The SA rate of loans entering the foreclosure process was 0.44 percent in the fourth quarter, down 1 basis point from the previous year and up 5 basis points from the third quarter of 2004.

"The U.S. economy grew at almost 4 percent in annualized real terms during the fourth quarter of 2004, adding 190,000 payroll jobs per month. Combined with the low interest rate environment, consumers improved their household finances and the percentage of homeowners making their mortgage payments on time increased to nearly 96 percent," said Doug Duncan, MBA's chief economist and senior vice president. "Economic growth is expected to slow slightly, but remain strong over the next couple of years. Likewise, job growth should be steady in the presence of modest interest rate rises. These expectations likely mean we will continue to see moderate declines in delinquencies for the next few quarters."

The seasonally adjusted delinquency rates decreased for all loan types over the last year. Since the fourth quarter of 2003, the SA delinquency rate has decreased 15 basis points for prime loans (from 2.37 percent to 2.22 percent), 165 basis points for subprime loans (from 11.53 percent to 9.88 percent), 2 basis points for Federal Housing Administration (FHA) loans (from 12.23 percent to 12.21 percent) and 103 basis points for Department of Veterans Affairs (VA) loans (from 7.99 percent to 6.96 percent).

The SA delinquency rate for prime fixed-rate mortgage (FRM) loans is down 7 basis points (from 2.11 percent to 2.04 percent) and down 70 basis points for prime adjustable-rate mortgage (ARM) loans (from 2.81 percent to 2.11 percent) when compared with one year ago. Since last quarter, the SA delinquency rate for prime FRM loans is down 11 basis points, while the rate for prime ARM loans decreased 12 basis points.

The annual decrease in delinquency rates for subprime loans is even more dramatic: The SA delinquency rate for FRM loans is down 143 basis points (from 10.50 percent to 9.07 percent) and down 338 basis points for ARM loans (from 12.90 percent to 9.52 percent). Since last quarter, the delinquency rate for subprime FRM loans decreased 60 basis points, while the delinquency rate for subprime ARM loans decreased 70 basis points.

On a year-over-year basis, the foreclosure inventory percentage decreased 6 basis points for prime loans (from 0.55 percent to 0.49 percent), 165 basis points for subprime loans (from 5.63 percent to 3.98 percent), 26 basis points for FHA loans (from 2.93 percent to 2.67 percent) and 9 basis points for VA loans (from 1.59 percent to 1.50 percent).

Over the last year, the SA percentage of new foreclosures decreased 63 basis points for subprime loans (from 2.10 percent to 1.47 percent) and 1 basis point for VA loans (from 0.49 percent to 0.48 percent), while remaining unchanged for prime loans (0.20 percent) and increasing 14 basis points for FHA loans (from 0.91 percent to 1.05 percent)-a record high.

Since last quarter, the SA percentage of new foreclosures increased 2 basis points for prime loans, 11 basis points for subprime loans and 7 basis points for FHA loans, while decreasing 3 basis points for VA loans.

If you are a member of the media and would like a copy of the survey, please contact Matthew Royse at (202) 557-2727 or mroyse@mortgagebankers.org, or Teresa Dingboom at (202) 557-2924 or tdingboom@mortgagebankers.org. If you not a member of the media and would like to purchase the survey, please call (800) 348-8653.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site:  www.mortgagebankers.org.