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Mortgage Delinquencies Fall to Lowest Level in Two Years

The delinquency rate for mortgage loans on single-family residential properties dropped to 8.22 percent at the end of 2010, the ""Mortgage Bankers Association"":http://www.mortgagebankers.org (MBA) reported Thursday.


That's down about 10 percent from the rate reported by the trade group three months earlier and is its lowest mortgage delinquency reading since the fourth quarter of 2008.

Jay Brinkmann, MBA's chief economist, says the latest numbers represent ""significant across-the-board"" decreases in delinquent mortgages in the United States.

He noted that mortgages only one payment past due â€" 3.25 percent of all outstanding mortgages â€" have fallen to the pre-recession levels of late 2007.

But perhaps most importantly, Brinkmann said, loans three payments (90 days) or more past due have declined from an all-time high delinquency rate of 5.02 percent at the end of the first quarter of 2010 to 3.63 percent at the end of the fourth quarter of 2010. That's a drop of almost 28 percent over the course of the year.

""Every state but two saw a drop in the 90-plus day delinquency rate and the two increases were negligible,"" Brinkmann said.


North Dakota and Arkansas were the only states in which 90-plus day delinquencies did not decline.

The total U.S. mortgage delinquency rate (8.22 percent) reported by MBA does not include loans that are already in the process of foreclosure. While all delinquency buckets posted declines during the fourth quarter of last year, loans in foreclosure tied the all-time record high in MBA's survey as resolutions were delayed following the industry's robo-signing debacle and the foreclosure moratoriums that followed in October.

According to MBA's latest report, the percentage of loans in the foreclosure process at the end of the fourth quarter was 4.63 percent, up 24 basis points from the third quarter of 2010 and up five basis points from one year ago.

The percentage of loans on which foreclosure actions were started during the fourth quarter, however, was 1.27 percent, down seven basis points from the previous three-month period.

MBA says the combined percentage of loans in foreclosure or at least one payment past due was 13.56 percent on a non-seasonally adjusted basis, a 22 basis point decline from 13.78 percent in the prior quarter.

""While delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner,"" Brinkmann said.

He noted that despite continued high levels of unemployment, the economy did add over 1.2 million private sector jobs during 2010 and, after remaining stubbornly high during the first half of 2010, first-time claims for unemployment insurance fell during the second half of the year â€" all factors that bode well for the nation's mortgage delinquency picture.

""Absent a significant economic reversal, the delinquency picture should continue to improve during 2011,"" Brinkmann said.

About Author: Carrie Bay

Carrie Bay is a freelance writer for DS News and its sister publication MReport. She served as online editor for DSNews.com from 2008 through 2011. Prior to joining DS News and the Five Star organization, she managed public relations, marketing, and media relations initiatives for several B2B companies in the financial services, technology, and telecommunications industries. She also wrote for retail and nonprofit organizations upon graduating from Texas A&M University with degrees in journalism and English.

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