TransUnion said today that the serious mortgage
delinquency rate is heading downhill at a quickening pace, however long term
delinquencies and the slow process of resolving them are impeding a return to
more normal rates. According to year-end data from the credit reporting
company, the rate of serious delinquencies - 60 days or more - fell 14 percent
in 2012 compared to 7% in 2010 and 6% in 2011. By contrast, when rates were rising, from
2007 to 2009, they increased by at least 50 percent each year.
The
final quarter of 2013 was the fourth consecutive one in which the 60+ day rate
declined, dropping from 6.01 percent in Q4 2011 to 5.19 percent in Q4
2012. The rate was 5.41 percent at the
end of Q3 2012. 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 national mortgage
delinquency rate experienced its largest yearly decline since the conclusion of
the recession, though we still remain far above normal levels," said 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.
"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," said
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."
On a quarter-over-quarter basis thirty-seven
states and the District of Columbia experienced improvement in their mortgage
delinquency rates along with 81.4 percent of metropolitan statistical areas
(MSAs). The greatest declines were experienced in
Arizona (-30.93 percent), California (-29.55 percent), and Utah (-20.89
percent.)
On a year-over-year basis all but
three states, Maine (+4.26 percent), Arkansas (+3.02 percent), and North Dakota
(+2.00 percent), had delinquency rate decreases. North Dakota, however still has the lowest
rate in the nation, 1.53 percent, followed by South Dakota (1.97 percent) and
Nebraska and Alaska tied at 2.20 percent. The highest rates of delinquency are
in Florida at 12.47 percent, Nevada (10.45 percent), and New Jersey (7.72 percent.)
The average mortgaged homeowner in
the U.S. was carrying mortgage debt of $186,785 in Q4 compared to $188,194 a
year earlier, a -0.75 percent change.
The states with the highest average mortgage debt were the District of
Columbia ($375,353), California ($324,867), and Hawaii ($315,721.)
TransUnion's forecast is based on various
economic assumptions, such as gross state product, consumer sentiment,
unemployment rates, real personal income, and real estate values. The forecast
would change if there are unanticipated shocks to the economy affecting
recovery in the housing market or if home prices fall more than expected