Foreclosures Slow but Delinquencies Rise

Provided By Realty Times

A new report indicates that the number of delinquent mortgage borrowers climbed in the second quarter. That's people who have missed at least one payment, according to the Mortgage Bankers Association (MBA).

There has been a steady improvement in the past couple of years, but this slight increase of 0.12 percentage points in the delinquency rate to bring the seasonally adjusted rate to 8.44% of all loans outstanding as of the end of the second quarter, 2011 breaks that gradually improving trend.

However, it's not so bad. The MBA also reports that the number of loans that are delinquent more than 90 days has declined. It's those mortgages that are often moved into a repossession process.

So how bad are the early delinquencies? Often what can happen when borrowers are late for a short period of time is they can get back on track with their payments. Sometimes it's a matter of getting hit with an unexpected medical bill or a temporary cut in work hours.

The MBA believes that delinquencies are mirroring what we are seeing in the employment market.

"Mortgage loans that are one payment, or 30 days, past due are very much driven by changes in the labor market, and the increase in these delinquencies clearly reflects the deterioration we saw in the labor market during the second quarter. Weekly first-time claims for unemployment insurance started the quarter at 385,000 but finished the quarter at 432,000. The unemployment rate started the quarter at 8.8 percent but climbed to 9.2 percent by the end of the quarter," said Jay Brinkmann, MBA's Chief Economist in a statement to the press.

Still, there's a silver lining. Foreclosures are back to levels that we saw in 2007. Not as many foreclosures, as in recent previous years, are being initiated, so more borrowers are finding ways to keep their homes.

"Looking across states, foreclosures continued to be highly concentrated in just a few states, with five states accounting for 52% of the foreclosure inventory in the second quarter. The single biggest factor determining whether or not a state has a large backlog of foreclosures is whether the state has a judicial foreclosure system, meaning whether or not a foreclosure needs to go through the courts. Of the 9 states whose percentage of loans in foreclosure is higher than the national average, only one, Nevada, does not have a judicial system of foreclosure."

There is more good news on the mortgage front. Loans since 2007 are performing better. The time period of 2005 to 2007 represented only 30% of all mortgages. But that same time period accounted for 65% of seriously delinquent loans.

ForeclosureResponse.org concurs in its findings and reports that serious delinquency rates for mortgages are stabilizing across the largest 100 U.S. metropolitan areas. The organization is quick to point out that our current levels have reached historic highs.

Are you behind on your mortgage? You have options. Call us at 972.772.7000 or frontdesk552@kw.com.