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Mortgage Delinquencies Fall for Second Consecutive Quarter

Dennis Norman St Louis

Dennis Norman

For some time now I’ve been saying the precursor to the housing market recovering is for the mortgage delinquency and foreclosure rates to fall from the present, near-record levels, down to closer to historical norms. The current mortgage loan delinquency report from TransUnion shows that, for the second consecutive quarter, things are headed the right direction. Granted the decline in loans that are 60 or more days past due declined only 1.48 percent to 6.67 percent but at least it is going the right diretion. The loan delinquency rate for the 2nd quarter of 6.67 percent is still an increase of 14.8 percent from a year ago when the delinquency rate was 5.81 percent. Highlights from the report:

  • Nevada was the state with the highest mortgage delinquency rates in the second quarter of 2010 at 15.86 percent. Florida was number two at 15.02 percent.
  • The lowest mortgage delinquency rates continued to be found in North Dakota (1.61 percent), South Dakota (2.23 percent) and Nebraska (2.61 percent).
  • Twelve states showed increases in delinquency from the previous quarter with Rhode Island (+4.63 percent), New Mexico (+4.45 percent) and Washington (+3.39 percent) leading the pack.
  • The average national mortgage debt per borrower again decreased (0.77 percent) to $191,284 from the previous quarter’s $192,774. The area with the highest average mortgage debt per borrower continued to be the District of Columbia at $366,627, followed by California at $345,502 and Hawaii at $311,130. The lowest average mortgage debt per borrower remained in West Virginia at $99,206.
  • On a year-over-year basis at a national level, mortgage originations dropped almost 50 percent.

“The second quarter decline in mortgage delinquency gives further credence to the notion that the credit market is stabilizing. Although this is good news for the consumer, the economy is still burdened by high unemployment, upcoming ARM resets and a glut of foreclosures,” said FJ Guarrera, vice president in TransUnion’s financial services business unit.

“The dynamics inside the mortgage market are changing. It is ironic that, with record-setting low interest rates, a large inventory of homes and low home prices, this is one of the most affordable times to buy a house within the last 50 years — yet most consumers are not considering a home purchase the investment opportunity it was considered in the past. Add to that irony and concurrent with these near perfect consumer buying conditions, tighter lending standards and increased documentation scrutiny have made it difficult for many consumers to qualify for a mortgage.”

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