Mortgage Delinquency Rate Continues To Decline

What will bring the real estate market back?  Less foreclosures.   To see if the foreclosure rate will be declining, you need to look earlier in the process. This article from HousingWire shows that delinquency rates are declining. Fewer delinquencies mean less foreclosures and the start of the healing process. “Strategic” defaults are slowing as well.

Even in an environment of declining home values, the number of Americans making good on their home loan continues to grow. The first-quarter national real estate loan delinquency rate decreased to 6.19%, according to credit-reporting agency TransUnion. The numbers are down 3.4% from 6.41% in the fourth quarter and down 8.6% compared to 6.77% a year earlier. The rate encompasses borrowers delinquent 60 days or more. According to Standard & Poor’s, U.S. consumers also reduced their revolving credit card debt by 18% since mid-2008 through default, borrowing less or paying down debt outstanding. This is the longest and fastest credit card deleveraging since record keeping began in January 1968. In addition, overall, strategic defaults have stabilized as home prices flattened, and initial jobless claims declined,” analysts said. “A trend worth watching, no doubt, but we can comfortably say that strategic defaults are less than 30% of all defaults, and the pipeline of borrowers [delinquent more than 90 days] has even lesser strategic delinquencies.” JPMorgan analysts used Standard & Poor’s/Case-Shiller indices and tracked prices against original loan amounts on a metro level. Then, analysts collected counts for all defaulted loans since 2007 and tracked those that started missing payments once the loan went underwater. They found 60% of all defaults were strategic by the middle of 2009, more than double the percentage in January 2008. One year later, across the private-label mortgage-backed securities market, the analysts found 10,000 strategic defaults fit their definition, down from nearly 20,000 the previous year. Source: HousingWire

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