Early Delinquency Rates Down, But Total Numbers Still High

Mortgage delinquency rates fell in the last quarter of 2009, according to the latest info from the Mortgage Bankers Association, with just 3.6 percent of all homeowners falling 30 days behind on their loans, a decrease from 3.8 percent in the third quarter. That is the first quarterly decline of that market segment since 2004.

“We normally see a large spike in short-term mortgage delinquencies at the end of the year due to heating bills, Christmas expenditures and other seasonal factors,” said MBA chief economist Jay Brinkmann. “…If the normal seasonal patterns hold for the first quarter, we should see an even steeper drop in the end of March data.”

“We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007,” Brinkmann added. He also said that the drop in initial delinquencies “gives us growing confidence that the size of the problem now is about as bad as it will get.”

Yet the overall numbers of delinquencies and foreclosures are still high. In the last quarter 9.47 percent of all borrowers were at least 30 days or more behind on their payments, which is down slightly from the third quarter but still very near the record high. In the bigger picture, there were 7.9 million mortgages, or 15 percent of all homeowners, that were either late on payments or somewhere in the foreclosure process. That’s not exactly a rosy scenario.

And there are now 2.6 million borrowers who have missed at least 3 payments, which is double the number from last year.

“That is the number that is going to produce foreclosures,” said Guy Cecala, publisher of Inside Mortgage Finance according to the Washington Post. “It is continuing to go up, and what it really means is that 2010 is going to be a bad year, perhaps worse than 2009 in the number of foreclosures.”

So the new numbers are not conclusive about the direction of the housing market, but we certainly welcome any sign of positive movement!

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