TransUnion: Mortgage Delinquencies Still On Rise, But at Slower Pace

by devteam November 17th, 2009 | Share

Delinquencyrnrates throughout the United States continued to increase during the thirdrnquarter of 2009.  The good news is that,rnfor the third consecutive quarter that increase has slowed.

Thisrninformation is contained in a report released today by analyzingrntrends in the mortgage industry and the impact of those trends on the consumer.

Therncompany, one of the three major credit reporting agencies in the country,rndistilled the information from 27 million individual credit files, a universe thatrnrepresents approximately 10 percent of all credit-active U.S. Consumers.

Thernnational rate for delinquencies of 60 days or more hit an all time high of 6.25rnpercent during the third quarter.  Thisrnwas an increase of 7.57 percent over the 5.81 percent national rate during thernsecond quarter.  This is the 11thconsecutive quarter that the delinquency rate nationwide has increased. 

Therngrowing delinquencies, however, are best seen in the context of the last twornyears.  For example, the delinquency raternfrom the end of the fourth quarter of 2008 to the end of the first quarter ofrn2009 increased by 14 percent and the next three-month period saw an 11.3rnpercent rise.  Since then each quarterrnhas shown a lower rate of increase than the quarter before. This could indicaternthat we are nearing the peak level for mortgage delinquencies and, consequentlyrnforeclosures, and that the rate will eventually begin to decline.

Thernstates with the highest delinquency rates continue to be Nevada and Florida atrn14.5 percent and 13.3 percent respectively while North and South Dakota were lowestrnat 1.7 percent and 2.3 percent closely followed by Vermont at 2.6 percent.  North Dakota, however, was among the statesrnwith the greatest increase in the rate, up 16 percent since last quarter.  Other states with double digit increases werernWyoming (17.9 percent) and Kansas (17.4 percent.  The District of Columbia's delinquency raterndecreased 0.19 percent.

Thernamount American's owed on their mortgages dropped from an average of $193,811rnin the second quarter to $193.121 in the third, a decline of 0.36 percent.  This, however, is a .043 percent increasernover the average mortgage debt of $192,287 one year ago.

The Districtrnof Columbia and California had the highest level of debt with averages overrn$350,000 per borrower.   West Virginia came in last at $97,265.

TransUnionrnsaid that economic indicators during the third quarter were “a mixed bag.”  The unemployment rate is also still climbing,rnbut like mortgage delinquencies is doing so at a slower rate.  Housing starts have dropped from thernpromising numbers seen at the beginning of the year, and consumer spendingrnremains weak.  F. J. Guarrera, vicernpresident of the company's financial services division said “The economic peaksrnand valleys that we experienced during the quarter will most likely continuerninto the first half of 2010.”

Guarrerarnsaid that it is a positive sign that increases in mortgage delinquency ratesrnappear to be slowing but we must keep things in perspective.  He said until the housing market “canrnconsistently demonstrate several months of home value appreciation and thernunemployment rate improves, mortgage delinquency will likely continue tornrise.  Many of these delinquencies inrnplaces like Nevada, California, and Florida will result in foreclosures,rnpotentially keeping home values depressed in these areas.”

Therncompany predicts that delinquencies will fall just short of 7 percent by year'srnend.  TransUnion's third quarterrnpredictions were slightly above actual figures but the company does not seernnational delinquency rates beginning to fall until the first half of 2010.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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