Rise in Mortgage Delinquencies is Cause for Concern

Mortgage delinquencies inched up in the second quarter of this year for the first time in five straight quarters, a directional shift that has mortgage regulators a little concerned.

According to a new report from the Office of the Comptroller of the Currency, of mortgages that were delinquent between 30 and 59 days, there was 0.4 percent increase to 3 percent in the second quarter from the previous quarter, while for loans that were 60+ days late, the delinquency rate grew 0.1 percent to 4.9 percent.

These increases in rates are so small, it would be easy to discount them. Statistically, second quarters generally post increases in mortgage delinquencies, making it difficult to tell if the new rates are following yearly trends, or if there is something more behind them.

“It’s something to not be overly worried about, but it’s something to clearly watch to see where this is going,” said Joseph Evers, the OCC’s deputy comptroller for large bank supervision as quoted in a Wall Street Journal blog post.

Another OCC mortgage official, Bruce Krueger, seemed slightly more flustered by the uptick in rates. In a conference call with reporters as reported in a MarketWatch article, Krueger said:

“It is an issue that we think needs to be closely monitored to determine if this is something more than just your seasonal effect,” he said. He said it will be important to see if the new delinquencies move into the 60 day delinquent category. “Is this just seasonal? Or is this something more? So yes, we are paying very close attention to it.”

Overall 12 percent of mortgage borrowers were either behind by one or more payments or were already in the foreclosure process. This percentage is up from 11.4 percent from the first quarter. Beyond seasonal factors, the continually weak employment market is likely to blame for the rise.

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