Mortgage Delinquency Rates Drop

Posted: Nov 26, 2010 |

The rate of mortgage delinquency dropped during the last three months. However, this is only because more homes have already been repossessed. You cannot be behind in payments anymore when you have already lost your house.

The number of borrowers who were behind in their payments dropped in the last three months which ended on September 30, with a 9.13 percent adjustment. This was according to a report that was released by the Mortgage Bankers Association last Thursday.

However, this number only includes borrowers whose loans are at least a payment behind, and do not include loans which are already on the brink of foreclosure. The number of foreclosures, in fact, rose to 1.34 percent of all loans, a rise from the 1.11 percent that was recorded in the last quarter.


According to Michael Fratatoni, vice president of research and economics at the Mortgage bankers Association, the delinquency rates have already decreased significantly, but mostly because of the reduction in the 90-plus days behind area. This represents a move to another area of delinquency, the ones which are already in the process of foreclosure.

So even though the delinquency rates have dropped, the only reason is that foreclosures are being pushed through the line at a faster rate.

Fratatoni adds that the foreclosures starts have increased in terms of rate, and this applies to all types of loans. In fact, the foreclosures starts rate for fixed loans have reached new record highs, while more loans continue to enter the foreclosure category.

Loans that are very delinquent can be in the pipeline for months. This contributes to the high rates of mortgage delinquency from one quarter to another. But if they go through the process more quickly, the delinquency rates will improve.

The rate of foreclosure for prime fixed loans has reached a record high rate at 1.12 percent. This is an indication that the main causes of payment problems on mortgages have continued to change since the meltdown in mortgages started in 2007. Other factors that are causing the foreclosure problem to get worse include unemployment and the continuous decrease in the economy.

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