Outstanding Mortgage Balances Declined $30B Each Month in 2011

Each month of 2011, outstanding mortgage balances in the U.S. declined by an average of $30 billion, according to a recently released report from ""Moody's Analytics"":http://www.moodys.com and ""Equifax"":http://www.equifax.com.

The report, authored by Christian deRitis, director of consumer credit economics at Moody's, attributes the decline to defaulted loans being written off.

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Aggregate delinquency rose by 6 basis points in December to 6.12 percent, according to the companies' joint study. The rate remains in line with rates seen since April but has declined since a January high of 8.25 percent. Delinquency rate by dollar amount rose 14 basis points in December.

Delinquency rates, however, vary by state with higher delinquencies in the West and parts of the South, while Oregon and parts of the Northeast are seeing the lowest delinquency rates.

Overall, delinquencies ""remain extremely high by prerecession standards as servicers struggle to cope with the overhang of distressed properties,"" deRitis says.

While defaulted loans are written off, they are not being replaced with newly originated loans. ""Outside of existing borrowers taking advantage of record low interest rates to refinance, few new mortgages are being originated,"" deRitis says.

Potential homebuyers continue to stall while prices keep falling and underwriting standards remain tight, according to deRitis.