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Delinquency Better But Might Deteriorate

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Despite several quarters in a row of falling residential delinquency, the outlook for the current period suggests the streak might end. The forecast has deteriorated significantly from just two months ago.

The final three months of 2010 capped off four consecutive quarters of improvement.

U.S. delinquency of at least two months fell to 6.41 percent from the third quarter’s 6.44 percent, TransUnion said Wednesday. The findings were based on data from 27 million consumer records.

The rate of delinquency was a vast improvement from 6.89 percent in the fourth-quarter 2009 .

However, the rate came in worse than the 6.21 predicted by TransUnion in December. 

TransUnion explained that the latest improvement was “the smallest decline since the recession ended in the summer of 2009.”

And trouble lies beneath the surface, according to TransUnion executive Tim Martin — who said he is concerned about the “current deceleration in falling mortgage delinquency rates.” He warned that declining real estate prices and a bloated foreclosure inventory have TransUnion less optimistic about future home prices.

“These models now suggest that the 60-day mortgage delinquency rate will likely be flat or edge up next quarter, but then begin to drift lower by year end,” Martin stated.

In Nevada, late payments were 14.76 percent, the highest of any state. Still, that was better than 15.12 percent in the third quarter.

Florida followed at 14.50 percent, also better than the prior period, when delinquency was 14.63 percent.

North Dakota again earned the distinction of being the state with the lowest rate: 1.72 percent. But North Dakota’s defaults deteriorated from 1.52 percent in the third quarter.

An analysis of 90- and 120-day delinquency has TransUnion predicting “a possible deceleration in foreclosure rates.”

The average mortgage amount fell to $189,046 from $190,176 three months earlier.

Also covered in the report were mortgage originations, which TransUnion said increased 43 percent from the final quarter of 2009. It was the only quarter during last year to see a year-over-year improvement.

Alaska’s 131 percent increase in originations was the highest of all states. Massachusetts followed with a 90 percent improvement. Nevada’s 5 percent rise was the smallest.

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