Mortgage delinquencies hit pre-recession levels

While the foreclosure rates in many states remain near record high levels, the number of homeowners who were late on mortgage payments decreased in several categories in the fourth quarter.

The Mortgage Banker’s Association says the delinquency rate for mortgage loans on residential properties declined to a seasonally adjusted rate of 8.22 percent during this time. This was down 91 basis points from the third quarter, and down 125 basis points from 2009’s figures.

The percentage of loans that began the foreclosure process during the final three months of 2010 was 1.27 percent, dropping seven basis points from the third quarter. However, these figures increased slightly from those observed during the same period a year ago.

“While delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner,” said Jay Brinkmann, the MBA’s chief economist.

The MBA said serious delinquencies – those more than 90 days overdue on payment – dropped from an all-time high of 5.02 percent at the start of 2010 to 3.63 during the fourth quarter. This rate is one of the prime indicators of future defaults, and as a result, the report indicates the foreclosure rate could decrease over the course of the coming year.