Delinquency Rate Falls 14% from 2011, but Remains Elevated

At the end of 2012, the national mortgage delinquency rate fell nearly 14 percent over a one-year period, while more than 80 percent of metropolitan areas saw their rates decline, according to a ""TransUnion"":http://www.transunion.com/ report.

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The rate of mortgages past due 60 or more days dropped to 5.19 percent in Q4 from 6.01 percent in the same quarter in 2011. The delinquency rate also declined 4 percent from 5.41 percent in Q3, marking the fourth consecutive quarterly decrease.

""The national mortgage delinquency rate experienced its largest yearly decline since the conclusion of the recession, though we still remain far above normal levels,"" said Tim Martin, group VP of U.S. housing at TransUnion.

According to the credit bureau, a ""normal mortgage delinquency rate"":http://dsnews.comarticles/transunion-projects-drop-in-delinquencies-but-rate-remains-high-2012-12-21 ranges from 1.5 to 2 percent.

At its peak during the mortgage crises, the national delinquency rate shot up 54 percent in 2007, 53 percent in 2008, and 50 percent in 2009, TransUnion reported. Then, in 2010, the delinquency rate retreated, falling 7 percent in 2010, 6 percent in 2011, and now 14 in 2012.

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""For the most part, newer vintage mortgage loans are not the reason for the stubbornly high delinquency rate. They are performing relatively well,"" Martin explained. ""The elevated delinquency levels that we still are experiencing are a result of older vintage loans -- borrowers who haven't been making their payments for a rather long time that are still in the system, inflating the overall rate.""

From Q3 to Q4, 12 states saw an increase in their delinquency rate, and just three states experienced no improvement year-over-year, according to TransUnion. The three states where the delinquency rate worsened were Maine, Arkansas, and North Dakota. Despite the increases, their rates were below the national average, with North Dakota still registering the lowest statewide delinquency rate at 1.53 percent.

Florida ended the year with the highest delinquency rate, 12.5 percent, while Nevada (+10.5 percent) and New Jersey (+7.7 percent) rounded out the top three.

After assessing metropolitan areas, TransUnion also found 81.4 percent of metros saw their mortgage delinquency rate go down year-over-year. Metro areas that saw a significant improvement in their rate include Los Angeles (-33.6 percent), Memphis (-32.2 percent), Philadelphia (-28.3 percent), Detroit (-27.2 percent) and Baltimore (-26 percent).

Although the mortgage delinquency rate has been trending downward, TransUnion expects future decreases to be fairly subdued.

""The declines in the mortgage delinquency rate will likely be muted for the foreseeable future as the foreclosure process in some states can take more than 1,000 days,"" Martin said. ""It's not clear yet, but recently announced regulatory rules related to mortgage servicing may tend to slow down this process further. What is clear from the data TransUnion collects, is that, until the old vintages work through the system, we expect the delinquency rate to remain elevated.""