Equifax: Home Finance Write-Offs Down to 5-Year Low

Home finance balances written off in the first quarter fell to a five-year low, according to ""Equifax's National Consumer Credit Trends"":http://www.equifax.com/home/en_us report for March.

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The balance for home finance write-offs, which includes loans that completed the foreclosure process, transitioned into REO status, entered bankruptcy, or were charged off by the lender, decreased to $43.1 billion in the first quarter of this year, the Atlanta-based credit agency reported. The balance represents a 22 percent decline from $55.4 billion in Q1 2012.

""Overall home finance balances decreased to $8.38 trillion in March 2013 from $8.64 trillion same time a year ago,"" said Amy Crews Cutts, Equifax's chief economist. ""The decline is due to write offs from foreclosures as well as from consumers paying down balances when refinancing, known as cash-in refinancing, shortening terms when they refinance their loans or making extra principle payments each month for faster amortization; some have even paid-off their mortgages entirely.""

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Loans in the home equity revolving category decreased 44.1 percent year-over-year in March, while home equity installment loans were down 32.9 percent. First mortgage loans decreased 17.6 percent during the same time period, Equifax revealed.

Among first mortgage loans, the total balance for severely delinquent mortgages (90 days past due or in foreclosure) decreased more than 29 percent year-over-year to $350 billion in March. The figure also represents a 51 decrease from the March 2010 peak when the balance was $714 billion.

Equifax found more than 65 percent of the severely delinquent balances were from loans originated from 2005 to 2007. The credit agency also noted transition rates for balances rolling from current status to 30 days-past-due, 30 to 60 day delinquencies, and 60 to 90 day delinquencies are all at new lows for a 5-year look-back period. Though, transition rates for balances moving from in-foreclosure to REO status are near the 5-year period peak.

Severely delinquent balances for the home equity revolving category decreased more than 29 percent year-over-year to $9.7 billion. Nearly three-fourths (73 percent) of the delinquent balances are from lines of credit opened from 2005 to 2007.

Home equity installment loans saw their balance of severely delinquent loans fall nearly 26 percent to $4.9 billion over a one-year period ending in March.