Serious Delinquencies Hit Five-Year Milestone

Serious Delinquencies Hit Five-Year Milestone


Mortgage delinquencies are on the decline, according to a report from Equifax. Home finance write-offs so far this year total $96.3 billion, down 22 percent compared to the same time period last year, the company says.

“We’re now back to where we were in mid-2008 in terms of severely delinquent first mortgages and current trends suggest we will be at pre-recession levels of severe delinquencies by the end of 2014,” said Amy Crew Cutts, chief economist at Equifax.

She credits “improvements in labor markets and rising home values” for the recent declines in delinquencies, adding that “the outlook is very positive for continued improvement.”

Delinquencies on first mortgages declined 24.5 percent year-over-year in September, according to Equifax.

Severe delinquencies—those 90 or more days past due—also declined, falling about 29 percent over the year. In

fact, Equifax points out that the balance of mortgages in severe delinquency is less than $300 million for the first time in five years.

Loans originated between 2005 and 2007—the bubble years—make up 64 percent of the loans in severe delinquency, according to Equifax.

REO rates also declined over the year in September, declining 27.9 percent, reaching a low not seen in more than five years. The current REO rate is 1.71 percent, according to Equifax.

“Generally speaking, transitions to deeper stages of delinquency are slowing, so for example, fewer loans that are now 30 days late are transitioning to 60 days late,” Crew Cutts said.

Crew Cutts also pointed out that Equifax has witnessed “acceleration in the transition rates from loans that have started the foreclosure process to being bank-owned in REO status.”

This trend she attributes to “reductions in judicial timelines in states where foreclosures have to go through court review.”

Delinquencies among home equity installment loans and home equity revolving loans also declined over the year, falling 21.9 percent and 17.6 percent, respectively, according to Equifax.

The amount of severely delinquent home equity installment loans decreased 8.4 percent annually in September, while severe delinquencies among home equity revolving loans fell 24 percent, Equifax reported.


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