Driven by mortgages that are at least four months past due, serious delinquency took a turn for the worse last month. Meanwhile, mortgages outstanding are falling, and loan modifications might be having an impact.
First mortgage delinquency of at least 90 days was 6.02 percent in May.
The rate of seriously past-due payments deteriorated from April, when 90-day delinquency had improved four months in a row to 5.78 percent.
But defaults remain better than in May 2011, when the residential delinquency rate was 6.55 percent, according to the CreditForecast.com Household Credit Report from Moody’s Analytics and Equifax.
Last month, $24 billion in first mortgages were written off. In addition, consumers are shunning new mortgage credit — pushing down balances on first mortgages. Home loan balances have been falling by around $30 billion a month since the beginning of 2012 and are projected to continue falling as more loans end up in foreclosure.
Delinquency on overall consumer credit, including auto loans and bank credit cards, rose to 5.63 percent from April’s 90-day rate of 5.44 percent.
“The dollar delinquency rate across all loan products rose 20 basis points, to 5.6 percent, driven by an increase in the number of mortgages 120 or more days delinquent,” the report stated.
Moody’s and Equifax speculated that the increase in the 120-day rate could partly be the result of increased loan modifications that moved loans out of the foreclosure process as part of the multi-state servicer settlement earlier this year.
The report indicated that renewed concerns about the European sovereign debt crisis and weakness in U.S. employment are impacting the use and performance of credit.
