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Delinquency Rise Mostly Limited to Nonconforming, FHA

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A new report indicates that late payments on home loans deteriorated during the third quarter. The deterioration appears to be concentrated in non-conforming and government mortgages.

Third-quarter delinquency of at least two months was 5.88 percent. Past-due payments increased 6 basis points from the second quarter.

That was according to TransUnion, which reported the data Tuesday. The statistics are based on a database of 27 million anonymous consumer records randomly sampled every quarter.

The Chicago-based company said that it was the first time that delinquency has risen since the final quarter of 2009, when the rate was a record 6.89 percent.

“In the third quarter, the consumer was hit with several unanticipated shocks, including the U.S. credit rating downgrade, stock price declines, European debt concerns, stubbornly high unemployment, more downward pressure on home values and low consumer confidence,” TransUnion executive Tim Martin explained in the report. “All of this affects a borrower’s net worth and desire, or ability, to continue making house payments — especially if they are facing negative equity in their homes due to price depreciation.”

Fannie Mae previously reported that 90-day delinquency on its $3.2 trillion book of business fell to 4.00 percent at the end of the third quarter from the second quarter’s 4.08 percent, while Freddie Mac’s rate inched up to 3.51 percent on its $2.1 trillion total mortgage portfolio from 3.50 percent three months earlier.

Given the better performance at the government-sponsored enterprises, the rise in delinquency appears to be concentrated in non-conforming loans and loans insured by the Federal Housing Administration, where 90-day delinquency has risen to 8.7 percent as of Sept. 30 from 8.2 percent as of June 30. FHA loans outstanding amounted to $1.0 trillion.

However, the rate reported by TransUnion sits well below the same quarter last year, when delinquency was 6.44 percent.

TransUnion predicts that residential delinquency might rise during the next one or two quarters then “drift downward” next year.

Florida’s 14.08 percent rate was the highest of any state in the third quarter, followed by Nevada’s 12.39 percent and New Jersey’s 7.60 percent. Late payments reportedly rose in 64 percent of metropolitan areas.

The credit data firm reported that average mortgage debt per borrower climbed to $190,382 from the second quarter’s $189,205 and the third-quarter of last year’s $190,176.

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