Delinquencies Fall After Negative Equity Rises

Written by: Steve Cook   Wed, April 20, 2011 Beyond Today’s News, Foreclosure Situation


Mortgages delinquent 30 days or more are continuing to decline steadily even though the number home owners who owe more on their homes rose slightly in the fourth quarter last year.

 Considered a prime driver of delinquency and foreclosure, negative equity increased slightly at the end of last year, by 300,000 homes, as a result of declining values following the expiration of the tax credit.  Nationally, 11.1 million homeowners, or 23.1 percent of those with a mortgage, were underwater at the end of 2010, according to CoreLogic’s most recent Negative Equity Report.  Negative equity rates declined earlier in 2010 as tax credit sales helped raise home values.

 Yet Lender Processing Services reported yesterday that the March mortgage delinquency rate fell to 7.78, a decline of 11.6 percent from February and 19.4 percent below March 2010.  Delinquencies, which peaked in 2008, have fallen steadily for more than a year, though they are still twice the average in 1995-2005, before the Foreclosure Era. However, foreclosure inventories today are also far above historical norms by a factor of seven to eight.

 The decline in delinquencies has reduced first-time foreclosure filings in most loan types, except Option ARM foreclosures, which have increased nearly 20 percent in the past six months.

 A slowing down of processing following the Robosigning scandal is having a major impact on inventories and extending the depressing effect of large numbers of foreclosures on prices.  Some 4,111,000 mortgages are past 30 days but not yet in foreclosure, including 1,989,000 that are more than 90 days past due and 2,222,000 that are in foreclosure pre-sale inventory.  A total of 6,333,000 properties are either 30 days delinquent or more, or in foreclosure.

 States with highest percentage of non-current* loans: are Florida, Nevada, Mississippi, New Jersey and Georgia.  States with the lowest percentage of non-current* loans are Montana, Wyoming, Alaska, South Dakota and North Dakota.

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