For the sixth straight year, state housing finance agency delinquency rates for single family whole loan programs continued to increase in 2012, reaching the highest levels to date in some categories, according to Moody’s Investors Service.
As of December 31, total delinquencies, which include loans that are 60 or more days delinquent and in foreclosure, reached a new high at 8.03%, which represented an almost 4% year-over-year increase from the 7.72% rate in 2011.
“Despite the improvement in the housing market, delinquencies remain high due to continued high employment and a slowdown in foreclosure processing in several states,” analysts wrote in the 7-page report released Tuesday.
Moody’s expects that unemployment, which is a key driver of delinquency and foreclosure rates for HFAs, will remain comparatively high in the near term.
“In addition to unemployment, HFAs’ portfolios have been challenged by loan modification programs, loss mitigation initiatives and various state foreclosure moratorium policies, all of which have lengthened delinquency periods,” analysts said.
The largest increase was in the 90-plus category, which are loans that have been delinquent for 90 or more days. At a delinquency rate of 3.18% in 2012, late payments in that grouping rose 7.16% from 2011 to the highest level to date.
Foreclosures have also increased from the prior year, reaching a historically high level of 2.74%.
In the 60-plus days’ category, delinquencies have remained steady over the past two years, and even showed a slight decline in the rate, to 2.11% from 2.13%.
“The improvement has been fairly insignificant and, as such, has not mitigated the growth of the seriously delinquent loans,” the report said.
Moody’s does not expect a substantial number of rating downgrades as a result of the rising delinquencies.
The agency said it expects loan losses to remain small relative to the robust fund balances of most HFA programs, which have generally maintained stable financial performance during the post-crisis sluggish economy, despite high delinquency and foreclosure rates.
Moody’s rates single family debt of 45 HFAs, of which 30 administer whole loan programs. The agency surveyed the 30 issuers to obtain December 31 delinquency and foreclosure data.
HFA single family whole loan programs with the highest overall delinquencies for the fourth quarter of 2012 include those from the New Jersey Housing and Mortgage Finance Agency at 18.10%, Maryland Community Development Administration at 14.36%, and Illinois Housing Development Authority at 11.93%.
Moody’s expects that HFAs will continue to experience elevated delinquency rates in the next 18 to 24 months.