The number of homeowners making late payments — or no payments — on their mortgages fell for the fifth straight quarter in the first three months of 2011. But the figure remains stubbornly high compared with the pre-crisis norm, likely because of the huge backlog of homes waiting to be foreclosed.
The rate of borrowers nationwide who were 60 days or more past due on their mortgage payments fell to 6.19 percent for the three months ended March 31, according to credit reporting agency TransUnion. That was down from 6.77 percent at the same time last year.
Delinquency rates were highest in Florida, at 14.37 percent, down from 14.65 percent a year ago, followed by last year's leader, Nevada, at 14.19 percent, down from 15.98 percent.
Arizona was next, at 9.14 percent, compared with 10.94 percent in the 2010 first quarter. California, fourth at 8.58 percent, showed the biggest drop of any state in the past year, falling from 10.68 percent. These four states were the hardest hit by the housing meltdown.
North and South Dakota continue to have the lowest delinquency rates in the country, at 1.54 percent and 2.53 percent, respectively.
South Dakota's rate actually rose, from 2.44 percent last year, one of nine states that saw an increase in late payments compared with last year. The biggest increase was in Maine, where delinquency climbed to 5.04 percent of borrowers, from 4.64 percent in the 2010 first quarter.
While the rates in most states and the nationwide rate are down from their peaks, they are still not near the pre-recession normal of around 2 percent, said Tim Martin, TransUnion's group vice president for the U.S. housing market. Nor has the mortgage delinquency rate improved as much as similar statistics for credit cards or auto loans.
"It's still a long way from the norm, and not improving as much as some of the other credit types," he said.
One reason for the rate to remain stubbornly high is the length of time it takes to foreclose on a house. There are up to 3.7 million seriously delinquent homes in the country, according to some estimates. And foreclosure listing firm RealtyTrac Inc. said last week that processing delays appear to be getting worse. In states like New York, for example, it now takes an average of more than two years for a home to go from the initial stage of foreclosure to being repossessed by a bank.
TransUnion's data is culled from 27 million credit reports, representing about 10 percent of all U.S. consumers who actively use some form of credit.
If delinquency continues to improve at its current pace, Martin said rates won't return to normal for another 8 years. "It just gives you a sense for how high these rates are, historically speaking, and how far we have to go at this kind of slow improvement pace," he said. TransUnion expects rates to continue drifting down through the rest of the year.
Data show that home prices and unemployment are strongly correlated with delinquency. While few mortgages written in recent years are falling into delinquency, Martin noted that housing prices appear to be falling again, which could discourage homeowners with little or no equity in their property from making their payments.
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