Delinquencies Decline

Recent data released by TransUnion shows that mortgage delinquencies have fallen for four consecutive quarters, and have dropped to the lowest rate in four years.

Mortgage delinquency rates fell 14 percent in 2012; this was an 8 percent improvement from the previous year, 2011, when delinquency rates declined 6 percent.  Delinquencies for 2010 fell 7 percent, which followed three consecutive years of delinquency rate increases above 50 percent.  Prior to 2010 mortgage delinquencies had risen 50 percent in 2009 when they reached the peak of nearly seven percent, and increased 53 percent in 2008 and 54 percent in 2007.

For the fourth quarter of last year mortgage delinquencies fell to 5.19 percent from 6.01 percent during the same period one year earlier.  Though last quarter’s delinquency figures are a step in the right direction they are still substantially higher than the historic average of between one percent and two percent.

TransUnion says thirty-seven states plus the District of Columbia saw improvements.  They anticipate that the national mortgage delinquency rate will continue to drop through March of this year, even though it expects the rate to remain above 5 percent.

Tim Martin, of TransUnion’s financial services business unit says that, “The declines in the mortgage delinquency rate will likely be muted for the foreseeable future as the foreclosure process in some states can take more than 1,000 days… It is not clear yet, but recently announced regulatory rules related to mortgage servicing may tend to slow down this process further.”

Data from TransUnion shows that many borrowers have not made mortgage payments in several years, yet they still have not lost their homes. In some states like California and Nevada new laws have delayed the foreclosure process even more.  At the same time other states like New York and New Jersey are still facing huge backlogs of bad loans “that will take years to make their way through the states’ court process.”

Further data reveals that loans made in the last few years, following far stricter underwriting guidelines, are faring very well, but there is a concern that thousands of mortgage modifications made during the same time period will default again.