US Mortgage Delinquencies Trend Higher in Q1

On Tuesday, the Mortgage Bankers Association (MBA) reported that the delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 4.04% of all loans outstanding at the end of Q1.

The delinquency rate was up 6 basis points from 2024Q4 and was up 10 basis points year-over-year. The percentage of loans on which foreclosure actions were started in Q1 increased by 5 basis points to 0.20%.

A voluntary VA foreclosure moratorium was in effect through the end of 2024 to allow time to implement the Veterans Affairs Servicing Purchase (VASP) Program, MBA Vice President of Industry Analysis Marina Walsh explained. That program has since ended without a replacement loss mitigation option approved by Congress. Further increases in the foreclosure rate could result if economic conditions worsen and loan workout options are unavailable.

Commenting on the report, Walsh added:

“There were mixed results for mortgage performance in the first quarter of 2025 compared to the end of 2024. Delinquencies on conventional loans increased slightly, while mortgage delinquencies on FHA and VA loans declined. Foreclosure inventories increased across all three loan types, and particularly for VA loans. Despite certain segments of borrowers having difficulty making their mortgage payments, the overall national delinquency and foreclosure rates remain below historical averages for now.

The percentage of VA loans in the foreclosure process rose to 0.84%, the highest level since the fourth quarter of 2019. The increase from the previous quarter marks the largest quarterly change recorded for the VA foreclosure inventory rate since the inception of MBA’s survey in 1979.”