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Defaults Decline

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Another report suggests loan defaults might have bottomed out. But mortgage originations have tumbled over the past year, with three states seeing production down by more than half.

Earlier today, Fitch Ratings reported that delinquency of at least 60 days on securitized subprime loans improved for the second consecutive month, while late payments on Alt-A residential mortgage-backed securities fell for the first time since April 2006.

Another report today from CoreLogic indicated that negative equity and unemployment — “the two most important triggers of default” — have stabilized during the past six months.

A third report, from TransUnion, indicated that 60-day mortgage delinquency during the first quarter fell for the first time in the last 12 quarters to 6.77 percent. The fourth-quarter rate was 6.89 percent, and the first-quarter 2009 rate was 5.22 percent.

Delinquency is projected to fall as low as 6.3 percent this year.

The Chicago-based credit repository based its statistics on 27 million anonymous, randomly sampled, individual credit files.

Nevada’s 15.98 percent delinquency rate was higher than any other state, and No. 2 Florida had a 14.65 percent rate. Delinquency was lowest in North Dakota: 1.76 percent.

The report indicted that the rate of increase on residential delinquency of at least 90 days slowed.

“With prices beginning to rise, increasing consumer confidence and positive trends in the equity markets, home owners who are currently upside down on their mortgages may be less inclined to join the ranks of defaulters, which have been growing in number since the summer of 2008,” FJ Guarrera, vice president at TransUnion’s financial services business unit, said in the statement.

The average U.S. mortgage borrower owed $192,774, down from $193,690 three months earlier. Washington, D.C.’s average $369,526 mortgage was highest, and West Virginia’s $99,677 was lowest.

TransUnion also reported that quarterly mortgage originations fell 38 percent from the first-quarter 2009. The decline was especially pronounced in Alaska, Utah and Idaho — which experienced respective declines of 56 percent, 56 percent and 55 percent.

“Part of the first-quarter demand for new homes was fueled by the First-Time Homebuyer Credit, which was extended to April 30, along with the provision allowing some current home owners to also qualify,” Guarrera explained. “Once this runs out, we could see some impact on mortgage demand and therefore home prices.”

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