Delinquency rate increases, foreclosures drop

The Mortgage Bankers Association recently released its latest National Delinquency Survey, which found the delinquency rate for mortgage loans increased to 8.44 percent of all loans outstanding as of the end of the second quarter 2011. The delinquency rate includes loans that are at least one payment past due, not including properties in the process of foreclosure.

Loans in the foreclosure process by the end of the quarter accounted for 4.43 percent of loans, while the percentage of loans that are 90 days or more past due or in foreclosure was 7.85 percent - both rates were down from the previous quarter. MBA chief economist Jay Brinkmann said while there is a decline in long-term delinquencies, it is offset by an increase in new delinquencies.

"Mortgage loans that are one payment, or 30 days, past due are very much driven by changes in the labor market, and the increase in these delinquencies clearly reflects the deterioration we saw in the labor market during the second quarter," Brinkmann said.

The report found mortgages issued between 2005 and 2007 account for 30 percent of all mortgages and 65 percent of all defaults. Mortgages issued after 2007 are performing better with lower default rates.

While delinquency rates increased this past quarter, homeownership decreased. A recent study by John Burns Real Estate showed homeownership fell to 65.9 percent in the second quarter, down from 66.4 percent, reaching its lowest level since 1998. In addition, the homeowner vacancy rate decreased to 2.5 percent this quarter as well. 

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