Mortgage Delinquency Rates Fall In 42 States

by Jann Swanson

TransUnion, a big three national consumer credit reporting agency, says that mortgage delinquencies of 60 days or more duration declined in the third quarter to 5.41 percent from 5.49 percent in the second quarter.  This was the third consecutive month that the rate declined and it is now 8 percent lower than in the third quarter of 2011 when it was 5.88 percent.

Rates in 22 states improved from the second quarter and 42 states saw an annual decrease.  However, only 49 percent of metropolitan areas improved during the quarter; in each of the first two quarters of 2012 more than 70 percent of metropolitan areas showed improvement. 

"Continued declines in mortgage delinquency rates are a welcome sign and reflect that relatively more homeowners are able and willing to make their mortgage payments each month," said Tim Martin, group vice president of U.S. Housing in TransUnion's financial services business unit. "However, we still have a long way to go to reach more 'normal' conditions of a delinquency rate in the 1-2% range for the U.S. average." 

The greatest annual improvement in the delinquency rate occurred in two of the states most impacted by foreclosures, Arizona and California.  Since the third quarter of 2011 Arizona's rate has dropped nearly 25 percent to 5.62 percent and California's rates is down 24 percent to 5.56 percent.  The largest increase was in the District of Columbia where the rate jumped 11 percent to 6.10 from 5.57 percent one year earlier.  Eight states also experienced annual increases with New Jersey registering the largest, nearly 10 percent to 8.33 percent.  The highest rates in the country are in Florida at 13.09 percent and Nevada at 10.93 percent but both of these states did show an annual improvement.

TransUnion expects the mortgage delinquency rate to fall again in the 4^th quarter, but only slightly. "It's generally tough to expect improvement in delinquency rates in the fourth quarter of the year given the extra demands on household income that many experience during the holiday season," said Martin. "However, we saw some improvement in the housing market in the third quarter with regard to house prices, home sales and increased refinance activity, and we believe we will start to see these numbers reflected in improved mortgage delinquency next quarter. As such, we forecast the year-end delinquency rate to improve to something in the 5.25%-5.35% range."

mortgagenewsdaily.com (November 13, 2012)