The national mortgage delinquency rate declined nearly 14% by the end of 2012, according to new data from Chicago-based TransUnion.
At the end of 2012, the mortgage delinquency rate fell from 5.41% in the third quarter of last year to 5.19% in the fourth quarter. The mortgage delinquency rate ended the fourth quarter of 2011 at 6.01%.
Thirty-seven states and the District of Columbia experienced improvement in their mortgage delinquency rates; only three states did not experience mortgage delinquency improvement from last year. Approximately 81% of metropolitan areas experienced a yearly decline in their mortgage delinquency rate, most notably Los Angeles (-33.6%), Memphis (-32.2%), Philadelphia (-28.3%), Detroit (-27.2%) and Baltimore (-26%).
‘The national mortgage delinquency rate experienced its largest yearly decline since the conclusion of the recession, though we still remain far above normal levels,’ says Tim Martin, group vice president of U.S. Housing in TransUnion's financial services business unit. ‘For the most part, newer vintage mortgage loans are not the reason for the stubbornly high delinquency rate. They are performing relatively well. 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.’
Nonetheless, TransUnion expects the mortgage delinquency rate to continue its downward trend in the first quarter of 2013, though it will likely remain above 5%.
‘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,’ adds Martin. ‘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.’