Industry data released Thursday indicates the number of borrowers in the United States behind on their mortgage payments is showing signs of improving.
[IMAGE] The ""Mortgage Bankers Association"":http://www.mortgagebankers.org (MBA) reported that the national delinquency rate for residential home loans fell to 7.99 percent in the third quarter.
That's the lowest reading since the fourth quarter of 2008, and it represents a decline of 45 basis points from the second quarter of this year and a drop of 114 basis points from the third quarter of last year.
The 30-day delinquency rate Ã¢â‚¬" typically a precursor of trends to come Ã¢â‚¬" reached its lowest level since the second quarter of 2007 at 3.19 percent.
The overall delinquency rate encompasses borrowers who have missed one or more payments but are not yet in foreclosure. While delinquencies fell, the number of borrowers entering the foreclosure process rose for the first time in a year.
MBA says the increase in foreclosure starts was driven by a handful of servicers and concentrated in certain hard-hit states, such as Florida and California.
The percentage of U.S. loans on which foreclosure actions were started during the third quarter was 1.08 percent,[COLUMN_BREAK]
up 12 basis points from the previous quarter but down 26 basis points from the third quarter of 2010.
According to Michael Fratantoni, MBAÃ¢â‚¬â„¢s VP of research and economics, foreclosure starts are now back up to the level seen in the first quarter of 2011.
Ã¢â‚¬Å“This is largely driven by loans leaving the loss mitigation process and the ending of state remediation programs and foreclosure moratoria,Ã¢â‚¬Â Fratantoni explained.
New Jersey, Arkansas, and Washington all saw significant decreases in new foreclosure actions across all loan types.
Fratantoni says itÃ¢â‚¬â„¢s an implication that there might have been state specific factors which led to a temporary stoppage on initiating the foreclosure process. These states also saw significant increases in the percentage of loans that are 90-plus days delinquent.
The nation's foreclosure inventory rate, which includes all loans in foreclosure, was 4.43 percent at the end of the third quarter.
That's the same reading reported for the second quarter, and represents a 4 basis point increase from a year earlier.
Ã¢â‚¬Å“While the delinquency picture changed for the better in the third quarter, the foreclosure data indicated that we are not out of the woods yet,Ã¢â‚¬Â said Fratantoni.
He described the foreclosure inventory as still Ã¢â‚¬Å“quite elevatedÃ¢â‚¬Â even though itÃ¢â‚¬â„¢s at its lowest level since last year.
The top five states in terms of the number of loans in foreclosure make up more than 52 percent of the national total, Fratantoni pointed out. These include Florida, California, Illinois, New York, and New Jersey.
Fratantoni added that the disparity in loans in foreclosure between the judicial and non-judicial states continues to widen as backlogs grow with more new foreclosures entering the pipeline.