Mortgage Deliquency Rate Hits All-Time High In 2Q

NEW YORK — The delinquency rate on U.S. mortgage loans hit an all-time high in the second quarter, but the pace of growth for the rate slowed, a possible sign the mortgage crisis may be beginning to turn the corner.

Data provided by credit reporting agency TransUnion shows the ratio of mortgage holders who are 60 days or more behind on their payments increased for the 10th straight quarter, to 5.81 percent nationwide for the three months ended June 30.

That's up 65 percent, from 3.53 percent, in the 2008 second quarter.

Deliquency of 60 days is considered a precursor to foreclosure, because of the difficulty homeowners would have coming up with two back payments to bring themselves current.

While the deliquency rate hit a new high, however, the increase from the first quarter to the second was 11.3 percent. In the two prior quarters, the rate jumped nearly 16 percent.

That slowdown may be a good sign, said FJ Guarrera, vice president of TransUnion's financial services division. "We have reason to be cautiously optimistic," he said.

While there's no way to know exactly why the pace of growth is slowing, Guarrera said, it appears that programs aimed at helping distressed homeowners from both the government and mortgage lenders are beginning to help. In addition, he said, consumers are being more careful with their spending.

For the second quarter, Nevada, Florida, Arizona and California remained the four states with the highest deliquency rates, mirroring the locations where foreclosures are the highest. Nevada's deliquency rate spiked to 13.8 percent, from 11.6 percent in the first quarter and 6.63 percent in the 2008 second quarter.

In Florida, the delinquency rate rose to 12.3 percent, from 11 percent in the first quarter, and 6.47 percent in the 2008 second quarter.

TransUnion culls its database of 27 million consumer records to produce the statistics.

North Dakota and South Dakota remained the states with the lowest deliquency rates. North Dakota's rate actually edged down a hundreth of a percent, to 1.5 percent. Ohio, Idaho and Connecticut also saw decreases from the first quarter to the second.

Guarrera saw particular importance in the statistics for Ohio, where deliquency edged down to 4.57 percent from 4.58 percent in the first quarter.

The Ohio rate remains up substantially from the 2008 second quarter, when it stood at 3.77 percent, but the quarter-over-quarter decline, while small, was significant, he said.

"I believe this is a precursor to recovery," Guarrera stated, noting that the recession was felt first in the Rust Belt and Sun Belt states. "We see this as a really good sign."

Not all of the news was positive, Wyoming and Utah, two states that have been far from the center of the foreclosure crisis, saw their deliquency rates jump the most, to 2.85 percent and 4.68 percent, respectively. Guarrera noted both states has a small populations, so results can be skewed by small changes.

TransUnion still expects the mortgage deliquency rate to keep rising, but now expects the national rate to top out just under 7 percent around the end of the year. That's a slight revision from earlier in the year, when the company predicted the rate would go past that mark.

Nevertheless, it's going to take about a year before the rates start to fall across most of the country, Guarrera said, and it will be quite some time before the national rate returns to its historic norm between 1.5 percent and 2 percent. "Forecasts are telling us that the recovery will be slow," he said.

(This version CORRECTS the previous version which reported data from the fourth quarter of 2008.)

Comments

[Nosepuede]

09:38 PM on 08/18/2009

and now thousands more people have new car payments thanks for the clunker give away

[rubrik r]

04:46 PM on 08/18/2009

The unemployment rate in the nation, which stands at 9.4% currently, may even increase to alarming double digit number making the financial situation even worse for the borrowers to repay. The layoffs of many workers have been permanent and hence, their hopelessness in recovery of the jobs or helplessness to repay loan amount over time looks bleak and they resort to foreclosure than choosing to invest or borrow more money on something that they are not sure whether they would be able to afford in the long run.
The housing delinquencies and foreclosures have seen an alarming rise in the first quarter of this financial year. Among the 34 million loans that are tracked by The Office of the Comptroller, the foreclosure rates rose by 22% and surprisingly, this is a 73% increase as compared to the same period last year. This puts forth a question whether the banks and policymakers are intelligently tackling the problem.

Read more: http://www.housingnewslive.com/articles/housing-bottom.php

[bankownedbyamerica]

10:34 AM on 08/18/2009

The most pressing issue is why we, the American people, were fooled into thinking Obama would create more jobs.
hat tip to http://www.iamned.com ...

[comicpro]

08:54 AM on 08/18/2009

They say the same thing every month that 'things may be turning around" yet the records continue month after month!

[Suze100]

08:00 AM on 08/18/2009

People seem surprised that the banks are making a fast buck. When they lend you money, they don't do it for your benefit! Banks are there for 1 reason - to make as big a profit as possible.

Why are people surprised by this, it is business.

For your part you need to shop around and get the best deal you can, you do not owe any bank any favours.

Suze 100% Mortgage Info

[breakingpoint]

04:39 AM on 08/18/2009

let's give more money to the benevolent banks
they deserve it

[Vinca]

07:06 AM on 08/18/2009

On the TV crawl. yesterday, was the question,

[unite4change]

01:53 AM on 08/18/2009

Has anyone else heard about the other foreclosure scheme:

The bank sends a letter saying they are forceclosing on your property. You vacate the premises believing their property is in foreclosure; however, the bank never completes the foreclosure because they don't want to pay the costs associated with the foreclosure or property taxes. So since they never actually completed the foreclosure process, the property owner is responsible for the taxes even though they vacated the property thinking the property belong to the bank.

[Protea32]

12:04 PM on 08/18/2009

The Milwaukee paper had a fantastic article about that scam a month ago. I posted the link at the time. Sometimes they will go through with the foreclosure, and ask the court to 'vacate' the foreclosure, sometimes they will hang to the paperwork after the sheriff's sale instead of returning it to the judge, which means the borrower still is the legal owner. The city is going bonkers because of the lost property taxes, as well as the cost of cutting the grass in the summer and snow and ice removal in the winter, the neighbors are going bonkers because the houses are falling down (it's just in the poorer neighborhoods either), the banks are (especially Chase and U.S. Bank) are giving the city the middle finger, and the borrower, who sometimes moved out of state, is getting hit with the bill, which they have no money to pay.
The only silver lining is that in Wisconsin, it's very possible that when the banks try to foreclose again in a few years, (when they think they can sell the house), many judges will laugh at them, and some people will end up owning their house outright. Some banks are so hard up that they are using the 'we can't find the original note' deal, so the borrower does own the house outright. My question is, what happens in a few years when the bank suddenly 'finds' the original note?

[Protea32]

02:56 PM on 08/18/2009

P.S.
I meant to say "it's not just in the poorer neighborhoods either"

[loki]

12:52 AM on 08/18/2009

the only ones making out in this deal is the banks who are getting bailouts that cover the losses, the people buying these places dirt cheap and turning them into rentals that they will resale at a huge profit if the market every comes back, and , I can at least speak about the midwest, apparently drug dealers are dumping tons of cash into foreclosures to laundry money if and when the market picks up.
If you have money, its a fantastic time to take advantage of people who are hurting. I think they teach that at Harvard, profit making 101. Ivy greed goes wild when the world is in pain.

[graffitijoe]

12:21 AM on 08/18/2009

9.4% unemployment. Record foreclosures. Gas @ $3 per gallon. Consumer spending down. Record deficits.

How's that hopey-changey thing workin' out for ya?

[AllenD]

12:33 AM on 08/18/2009

Thanks for the trainwreck we inherited from you rightards!

[sc300nc]

10:00 AM on 08/18/2009

Keep blaming bush. That's going to work really well in Obama's next campaign. Oh well, 4 years for O is better than none.

[leevntheus]

12:04 AM on 08/18/2009

homeless poor out of work means great recruiting rates for the military to get us ready for the Great War.

[Tiggy]

11:50 PM on 08/17/2009

This is the result of TARP! What a success! Families lost their homes, their jobs, their savings and their dignity, but look on the bright side, those that created this mess retained their jobs and their bonuses.

With all these pressing issues at hand, Congress still had to recess. What a joke. What amazes me is how far removed from the people Congress has become.

[unite4change]

01:57 AM on 08/18/2009

Here is an example of the forclosure scheme the banks are using:

http://healdsburgbubble.blogspot.com/2009/07/derelict-foreclosure-ruins-neighborhood.html

[TalkingOutLoud]

11:42 PM on 08/17/2009

But wait; didn't you get the memo from Wall Street and the Insurance company - All State. You know, the memo that says "we've learn so much after 2008; we learned that Jenga at home is better then a nice fat juicy steak at those fancy boring restaurants and how nice it is to have friends over and crowed around that 3" TV in the freakin' garage [if you still have one]"

I just love how they're trying to convince us that we're better off now, now that WE'VE learned the wonderful lesson of less!

Strange how they've NOT cut back; they still eating at those restaurants and watch their 500" TV in their 1.2 million dollar bathrooms. And fighting with everything they've got to keep the status-quo!

Whew, I feel so much better learning how to do without and I'm glad the insurance industry and Wall Street feel it's 'morning in America' again. I got the memo, I got it alright - GAG !!!

[watchTVgetSTUPID]

11:23 PM on 08/17/2009

If we are not in a recession, it is because we are in a Depression.

Clinton/Bush/Obama all have sold our economic souls to the Wall Street manipulators.

[sueinmn]

10:57 PM on 08/17/2009

Its only gonna get worse until they adress this issue! So far we have had lip service only.

[rds2301]

09:10 PM on 08/17/2009

Maybe it’s the smoke from Mt. Vesuvius that keeps Arianna Huffington and the financial community from seeing that the economic collapse has nothing to do with the Fed “missing” the warning signs leading up to the October meltdown.

“Things do not happen. Things are made to happen.” John F. Kennedy

The Fed didn’t miss anything; the October meltdown was an inside job.

Read the entire article at http://dprogram.net/2009/08/17/2008-financial-collapse-an-inside-job-robert-singer/#more-18837

Arianna you should publish this article.. Bob

[blastocyst]

09:54 PM on 08/17/2009

The air's thick with the residue of smoking gnus.
Or the other thing.