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Fewer Homeowners Falling Delinquent; More Delinquent Borrowers Bringing Payments Current

Dennis Norman

A report published by Lender Processing Services (LPS) analyzing homeowner’s performance on their mortgages as of March 2010 shows that, while foreclosure and mortgage delinquency rates are still near record levels, the pace may be slowing with fewer new loans becoming delinquent and an increase in the number of people bringing their loans current.

Fewer Borrowers Are Going From Current To Delinquent –

The dark blue line on the chart below represents the number of “new” delinquencies for each period, and as you can see, the number dropped sharply in March for people that moved from current to 30 days late. While not as big of drop, the number of borrowers going from 30 to 60 days late and 60 to 90 days late dropped as well.

lps-new-delinquencies

Source: Lender Processing Services, Inc. (LPS)

Fewer Borrowers Are Becoming Seriously Delinquent –

 

As the chart below shows, the number of borrowers that were current on their home loans as of January 1st but then were 60 or more days delinquent as of the end of March is lower this year than last year for all types of home loans, with the exception of FHA loans which are about the same as last year.

 

lps-mortgage-delinquency2

Source: Lender Processing Services, Inc. (LPS)

More Delinquent Borrowers Are Becoming Current –

The chart below shows that the number of people that were delinquent on their house payments but became current again in March increased significantly over the month before. The trend thus far this year has been good.

 

lps-curing-to-current

Source: Lender Processing Services, Inc. (LPS)

The Light At the End of the Tunnel –

If the trends above continue then I would expect in a few months we will start seeing a decline in the foreclosure rate which would be a huge step in the right direction with regard to stabilizing the housing market. Foreclosures disrupt the housing market by adding to inventory of homes for sale and bringing prices down, making it harder for an already challenged market to recover. Once the foreclosure rates start dropping, and continue trending downward we will hopefully be on our way to better times.

 

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