By david h. Stevens
PRESIDENT AND CEO, MORTGAGE BANKERS ASSOCIATION
DelinquencieS AnD forecloSureS Drop SHArply
Mortgage delinquency and foreclosure rates finished 2012 down sharply, according
to the fourth-quarter National Delinquency Survey released by the Mortgage Bankers
The delinquency rate for mortgage loans on one-to-four-unit residential properties dropped
to a seasonally adjusted rate of 7.09 percent of all loans outstanding as of the end of this
past fourth quarter. This is the lowest level the delinquency rate has been since 2008 and
represents a decrease of 31 basis points from this past third quarter — and a decrease of
49 basis points from one year ago. Although delinquency rates typically increase between
the third and fourth quarters, the non-seasonally adjusted delinquency rate decreased 13
basis points to 7. 51 percent this past fourth quarter. In MBA’s 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 on which foreclosure actions were started this past fourth quarter
was 0.7 percent, the lowest level since second-quarter 2007. The rate dropped 20 basis
points from this past third quarter and 29 basis points year over year. The percentage of
loans in the foreclosure process this past fourth quarter was 3. 74 percent — the lowest
level since fourth-quarter 2008 and down 64 basis points year over year.
The serious delinquency rate — the percentage of loans that are 90 days or more past due
or in the process of foreclosure — was 6. 78 percent, a decrease of 25
basis points from this
past third quarter. The
combined percentage of
loans in foreclosure or at
least one payment past
due was 11. 25 percent
on a non-seasonally adjusted basis, a 128 ba-sis-point decrease from
the previous year.
u.S. hiSToric Al delinquency r ATeS
Q4 ’ 10
All past-due loans
90-day or more delinquency rate
Q4 ’08 Q4 ’09
30-day delinquency rate
Q4’ 11 Q4’ 12
Source: Mortgage Bankers Association
Overall, we are seeing
ments in mortgage performance nationally and in most states. The 30-day delinquency
rate, as well as the number of new foreclosures started, is at the lowest level since 2007,
and the rate of loans in the foreclosure process is at the lowest level since 2008.
Two of the biggest factors negatively affecting the housing market are the significance
of the foreclosure problem in Florida and the judicial foreclosure systems in a number of
states. In Florida, 12 percent of, or one in eight, loans are in the foreclosure process. This is
down from a high of 14. 5 percent last year, but is still exceptionally high and impacts the
national rate. And although the number of loans in foreclosure has dropped in most states,
the average rate in states where foreclosures must go through the courts was 6. 2 percent,
triple the rate of 2.1 percent in nonjudicial states.
Additionally, Superstorm Sandy had an impact on the delinquency and foreclosure rates
in New York, New Jersey and Connecticut, all of which saw increases in total past-due
rates while most other states in the nation saw an overall decrease. Although forbearance is in place for many of the borrowers affected by the storm, we ask servicers to
report these loans as delinquent if the payment was not made based on the original
terms of the mortgage. As such, we expect to see improvements in these states as
The fourth-quarter delinquency and foreclosure numbers show considerable movement in
the right direction, with a number of the metrics at pre-recession levels. Foreclosure starts
and foreclosure inventory both saw the largest decreases in the history of the survey. We
did see a slight uptick in the 90-day-or-more delinquency rate and are keeping our eyes on
high foreclosure inventories in nonjudicial states, but the state of housing is undoubtedly
continuing to improve.
To subscribe to MBA’s National Delinquency Survey, contact MBAResearch@mortgagebankers.org.
David H. Stevens is president and CEO of the Mortgage Bankers Association. previously, Stevens served
as assistant secretary for housing at the U.S. Department of Housing and Urban Development and was
appointed commissioner of the Federal Housing Administration by president Obama. Stevens was also
president and chief operating officer of Long and Foster Companies, senior vice president at Freddie Mac,
and executive vice president at Wells Fargo. reach the MBA at (202) 577-2700.
mark cohen FOUNDER AND SENIOR MORTGAGE BROKER COHEN FINANCIAL GROUP
Cohen Financial Group’s Mark Cohen is making his
first appearance in Scotsman Guide’s Top Originators
rankings — and he’s making that debut a memorable
one. Based in Beverly Hills, Calif., Cohen closed more
than $590 million from 767 loans this past year,
earning him the No. 1 spot on our Top Dollar Volume
list. In fact, Cohen’s total volume is the largest we’ve
seen since we started compiling the rankings. We
spoke with him to learn more about his production and
approach to the mortgage business.
What kind of loans make up your production
For the most part, my business is jumbos. The average
loan here for myself is probably in the $900,000 range,
but at the same time, I do a lot of small loans — a lot of
conforming loans, $200,000 or $150,000 or so — so I
have a wide range of clientele, which I think smoothes
out the volatility in the business.
What are some of the keys to working in the
You have to have the relationships with people who
are in that price range. Being in a west-side town [in
Los Angeles], there’s a lot of affluent people — I grew
up here, so I know a lot of people — and just doing
a good job feeds upon itself. I have a lot of close
relationships with CpAs [certified public accountants]
and real estate brokers and business managers, who
are great referral sources.
how has the market changed in the past few
It’s getting to be a very aggressive market. There are
a lot of players in the market, and a lot of smaller,
regional-sized banks. I’m not so sure the major money-center banks are as big a player as they have been in
the past, but regional banks are popular. Mortgage
banking like what we do here is back in vogue — and
the broker business is strong, too — so I think there’s
been a little movement from the major money-center
banks to the smaller, niche lenders.
What advice would you have for up-and-
coming mortgage originators?
It’s a process. You have to be slow and patient, and
you’ve got to be confident in yourself. Know the
products, always respond back to people, and if you
don’t know an answer, say ‘I’ll get back to you.’ Be
professional. I think about how I would want to be
treated by somebody — [how I’d want to] deal with
somebody who’s confident and knowledgeable and
straightforward — so just reverse the situation.
how’s 2013 going so far?
The sales market is very strong in Southern California.
There’s heavy demand for houses. Most things are
selling instantly with backup offers and multiple offers
in all price ranges. rates are pretty consistent, so it’s the
perfect backdrop for a good real estate market. A little
more accommodating lending in some of the niches
that we have has really helped our company out. There’s
been a lot of portfolio lending — common-sense lending
— that has been just a big advantage for us versus
raymond Fleischmann is an associate editor at Scotsman Guide.