Delinquency on home loans improved for the fourth consecutive quarter and is expected to fall again. A more robust recovery, however, is being muted by the foreclosure process — which exceeds two years in some states.
Borrowers who were past due at least two months on their residential loans accounted for 5.19 percent of all home mortgages as of Dec. 31, 2012.
Delinquency slid from the end of the third quarter, when the rate was 5.41 percent.
Mortgage performance has improved each quarter since Dec. 31, 2011, a point in time when the default rate was 6.01 percent, according to the latest reading on loan performance from TransUnion — which culled the statistics from a sampling of its database of 27 million consumer records..
“The national mortgage delinquency rate experienced its largest yearly decline since the conclusion of the recession, though we still remain far above normal levels,” TransUnion executive Tim Martin said in the report. “For the most part, newer vintage mortgage loans are not the reason for the stubbornly high delinquency rate. They are performing relatively well.
“The elevated delinquency levels that we still are experiencing are a result of older vintage loans — borrowers who haven’t been making their payments for a rather long time that are still in the system, inflating the overall rate.”
Just three states did not see a year-over-year decline in late payments: Maine, where the rate climbed 21 basis points to 5.14 percent; Arkansas, which saw delinquency rise 12 BPS to 4.10 percent; and North Dakota, with its rate inching up 3 BPS to 1.53 percent.
TransUnion predicted that delinquency will continue to drift lower during the current quarter, though the rate is likely to stay above 5 percent. Martin noted that the forecast would be even more optimistic for the foreseeable future except that foreclosures are taking more than a thousand days in some states, and new regulations will likely extend the process even further.
Delinquency remained highest in Florida at 12.47 percent, though the Sunshine State’s rate retreated from 13.09 percent as of Sept. 30, 2012.
Nevada maintained its No. 2 ranking with a 10.45 percent rate. Nevada delinquency was down from 10.93 percent three months earlier.
New Jersey followed with a 7.72 percent rate, then 6.88 percent in Maryland.
The lowest delinquency could be found in North Dakota, though the rate increased to 1.53 percent from the previous period’s 1.44 percent.
South Dakota’s rate was the next-lowest at 1.97 percent, then 2.20 percent both in Nebraska and Alaska.
Compared to a year earlier, delinquency has fallen to 5.18 percent from 7.50 percent in Arizona — the biggest decline of any state. California followed with a 211 basis-point drop to 5.03 percent, then Utah, where the rate fell to 3.56 percent from 4.50 percent.
