The total balance for seriously delinquent first mortgages decreased to a five-year low as rising home prices reduce incentives to default, Equifax stated in its _National Consumer Credit Trends Report_.
In June, the balance of loans 90 days or more past due or in foreclosure fell to $325 billion, down 27 percent from last year when the balance stood at $450 billion. Loans originated in 2010 or later represented about 7 percent of the balance for seriously delinquent mortgages.
When only considering first mortgages in foreclosure, the balance was $105 billion in June, which is also a five-year low. The balance represents a 38 percent decrease from a year ago.
At the same time, the balance for loans that completed the foreclosure process and became bank-owned diminished as well, falling by more than 19 percent to $13.5 billion--the lowest level for June since 2007, according to the Atlanta-based Equifax.
""The implications of this trend are that more homeowners will be able to sell their homes without the hassles of negotiating a short sale or move to take a new job without worrying how they can afford to pay for two homes. The healing in the housing market is really gaining momentum and will fuel a stronger pace of economic recovery,"" said Amy Crews Cutts, Equifax chief economist.