Report shows mortgage delinquency ‘Roll Rates’ peaked in summer of 2009; Sign that worst is over?

Dennis Norman St Louis

Dennis Norman

Finally, some more good news about the housing market! TransUnion released a study of mortgage delinquency “roll rates” (when delinquent borrowers move to a more delinquent status, say from 30 days late to 60 days late, then 90 and so on) which showed that mortgage delinquency roll rates peaked in the summer of 2009. According to the study, approximately 24.4 percent of consumers who were 30 days past due on their mortgage payments in June 2009 became 60 days past due in July 2009 and nearly 37.6 percent of consumers 60 days delinquent on their mortgage payments becamse 90 days late in the same time.

While I think it goes without saying that borrowers who are already delinquent are susceptible to falling into deeper delinquency, the study shows that this” vulnerability was exacerbated during the recession as housing prices declined and unemployment increased”. It was noted that the the roll rates reached their peak one month after the end of the recession as determined by the National Bureau of Economic Research.

One of the interesting insights gained from the TransUnion study was the relationship between consumers with home equity loans or lines of credit and increased mortgage delinquency through the recession. The study indicated that, under certain circumstances, the presence of one of these loans may contribute to higher roll rates during trying economic times. In March 2006, the national 30-60 mortgage roll rate was 12.56 percent for borrowers with home equity loans/lines and 17.16 percent for those without. However, by March 2009 the 30-60 roll rate had skyrocketed to 26.55 percent for borrowers with home equity loans/lines, while increasing to only 22.66 percent for those borrowers without.

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