Delinquency Rate Differs With Type of Mortgage

One trade association says that mortgage loan delinquencies are at the highest level in 32 years, while another one reports a May delinquency decline to the lowest level this year.

They both can’t be right, or can they? They can and they are. Late last month the Mortgage Bankers Assn. said that 6.19% of a sample of 9.2 million home loans surveyed were at least 30 days past due, representing the highest delinquency level since the association began keeping records in 1953.

Now comes the United States League of Savings Institutions with the report that 1.68% of residential loans held by 900 savings institutions were 60 days or more past due. This represents a significant decline from a delinquency ratio of 1.99% in April and 2.22% in January.

“This is an indication of the economic turnaround and the strong underwriting practices of savings institutions,” according to William B. O’Connell, the league’s president.

A spokesman from the league’s Chicago headquarters said that both the mortgage bankers and the savings and loan league are right, but they’re talking about apples and oranges.

Mortgage bankers have a large number of FHA and VA loans, as well as graduated payment loans and they consider a loan delinquent with just one missed payment, or 30 days past due, researcher Dennis Jacoby said.

On the other hand, 95% of the loans surveyed by the savings league are conventional loans and mortgages are not considered delinquent until two payments are past due, or 60 days, Jacoby added.

“Traditionally, FHA and VA and graduated payment loans are much more prone to delinquency than conventional loans, which require a larger down payment,” he said.