Severely delinquent balances among first mortgages are on the decline, according to the latest National Consumer Credit Trends Report released by Atlanta-based Equifax.
While still elevated relative to historic levels, last month's total of $450 billion in delinquent balances represents a 37% decline from the peak of more than $700 billion in January 2010, according to Equifax. Of note is that 70% of outstanding delinquencies among first mortgages still remain tied to loans opened between 2005 and 2007.
The greatest level of change was seen among severely delinquent non-agency first-mortgage loans (90+ days past due or in foreclosure), which fell 45% to $320 billion in May from its peak of $580 billion in January 2010. By comparison, agency-sourced first mortgages reported as severely delinquent declined just 9% to $130 billion in May after peaking at $142 billion in January 2010. Similar reductions in severely delinquent totals were seen among home equity installment loans, which declined 31% from their peak in February 2011 ($880 million) to last month ($615 million).
‘That severe mortgage delinquencies are trending downward is not surprising given generally improving economic conditions,’ says Equifax Chief Economist Amy Crews Cutts. ‘What is surprising is that even with the foreclosure moratoriums and the slow resolution of foreclosure backlogs, the downward trend has been a steady, consistent drumbeat of recovery. If this pace continues, we expect the volume of severely delinquent mortgage balances to return to mid-2007 levels by the end of 2014.’
Equifax also reports that home equity revolving balances fell 18% from their peak of $680 billion in May 2009 to $560 billion last month, while total credit limits among home equity revolving accounts declined 27% to $1.02 trillion in May since their $1.3 trillion peak in March 2008.
Furthermore, year-to-date total mortgage write-offs through May are down 28% from their 2010 peak. Home mortgage balances are down 12.5% in May from their record-high of $9.8 trillion set in October 2008, while total mortgage debt outstanding now sits at $8.6 trillion.