Late mortgage payments up in 4th quarter
The government is seeking to reduce the role played by Fannie Mae and Freddie Mac in the housing market. Credit: iStock
Late payments on mortgages ticked up in the past three months of 2011, the second straight quarter-to-quarter increase after nearly two years of steady decline.
Credit reporting agency TransUnion said 6.01 percent of mortgage holders were behind on their payments by 60 days or more in the October-to-December period. That compared with 5.88 percent for the third quarter of 2011.
To be sure, the rate is down significantly from the fourth quarter of 2010, when 6.41 percent of mortgage holders were behind by two or more months. But the uptick is still unwelcome news.
"We were hoping for better, because delinquencies remain very high," said Tim Martin, group vice president of U.S. Housing in TransUnion's financial services business unit. Prior to the housing bust, the mortgage delinquency rate typically hovered around 2 percent.
"The more encouraging news is that, when looking year over year, . . . the delinquency rate dropped over 6 percent," Martin said. But, he said, "At this pace it will take a very long time for mortgage delinquencies to get back to normal."
He said the increase in the fourth quarter may in part reflect a return to seasonal patterns that disappeared during the economic downturn. Historically, delinquencies rose in the fourth quarter as some homeowners directed their funds elsewhere.
Of note were sharp declines in delinquency in Arizona, where the rate dropped to 7.5 percent from 9.7 percent a year ago, and California, down to 7.14 percent from 9.14 percent. These two states are among the hardest hit by the housing and foreclosure crisis.
Florida, which remains the state with the highest delinquency rate, saw a far smaller decline, to 14.27 percent from 14.5 percent.
TransUnion expects the rate of late payments to tick up again in the current quarter, and then resume its decline.
The news last week of a deal with the nation's five largest mortgage lenders will likely result in many suspended foreclosures being cleared off the books. And roughly 1 million homeowners are expected to see the size of their mortgage reduced through that deal with 49 state attorneys general, which should help reduce delinquency as well.
But until home prices stabilize and unemployment rebounds, Martin said many homeowners will continue to struggle with their payments. "Delinquencies won't get better until that other stuff works its way through the pipeline," he said.
