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Delinquency Slides

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Mortgage Daily

                                                 May 16, 2011

Despite a prior forecast that said first-quarter delinquency would rise — the rate retreated and is likely to improve for the rest of the year.

TransUnion Reported Monday that the 60-day delinquency rate on residential loans was 6.19 percent during the first quarter. Late payments were lower for the fifth consecutive quarter — falling from the 6.41 percent in the final three months of last year.

Delinquency also improved from the first-quarter 2010 — when the rate was 6.77 percent.

In its fourth-quarter report, the Chicago-based firm indicated that its models suggested that first-quarter delinquency was going to rise or at least not fall, but today’s report acknowledged the decline in delinquency during the first quarter was greater than the prior quarter’s decline.

The improvement in delinquency despite falling home prices “demonstrates that today’s borrowers are less risky,” TransUnion Vice President Tim Martin explained in the report.

“While many homeowners still face pressure to make ends meet, they have lived in their homes for a long time and have diligently been paying their mortgage each month,” Martin continued. “These are borrowers that have roots in their residential neighborhoods and may already have substantial equity invested.”

The forecast from the credit repository is for a continued decline in delinquency through the end of the year.

Florida’s 14.37 percent rate was the worst, followed by Nevada’s 14.19 percent. North Dakota’s 1.54 percent delinquency was the lowest of any state. The default rate rose the most in South Dakota — though the state still had the second-lowest rate. A total of six states saw deterioration.

The average U.S. borrower owed $190,115, higher than the previous quarter’s $189,046.

The report also indicated that demand for real estate credit, based on its 90-day Real Estate Inquiry Index, fell to the second-lowest level since the index was benchmarked in 2000. The first-quarter inquiry index was 26.04.

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