The number of bankruptcies rose to 42,000 in September – 43.5% higher than in August and an increase of 60.5% year on year. For the full third quarter, bankruptcies totaled 103,000, up 23% year-over-year, but still 18% below Q3 2019 levels.
ICE’s long-term rates, which combine delinquencies and active foreclosures, improved year over year for most loan types, including conventional mortgages through Fannie Mae And Freddie Mac (-3 fps), The U.S. Department of Veterans Affairs (VA) loans (-4 bp) and portfolio loans (-17 bp).
FHA loans remain a major concern. Their long-term rates rose 44 basis points year-over-year in September, and FHA mortgages represented 38% of active foreclosures – accounting for roughly half of this year’s increase in foreclosures and 80% of the increase in active foreclosures. ICE Mortgage Technology noted that remaining foreclosure growth reflects the expiration of the VA foreclosure moratorium.
ICE characterized the increase in government-backed credit problems as part of a market normalization process and not as a sign of broader weakness.
“The mortgage market remains remarkably resilient, with mortgage performance holding up well,” Andy Walden, head of mortgage and housing market research at ICE, said in a statement.
“Delinquencies improved in September, and even as we see an uptick in FHA loan activity, we are largely returning to more typical levels after several years of artificially low foreclosure volumes.”
A more detailed analysis will be available in the ICE Mortgage Monitor report on November 10.
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