This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Mortgage Delinquencies, Foreclosures Begin to Drop

NEW YORK ( TheStreet) - The number of loans in distress is declining, in yet another positive sign for the housing market.

According to the Mortgage Bankers Association's National Delinquency Survey, the delinquency rate for mortgage loans on one-to-four unit residential properties fell to a seasonally adjusted rate of 7.4% of total loans outstanding in the third quarter, a decrease of 18 basis points from one year ago.

Delinquent loans include loans that are at least one payment past due but on which foreclosure action has not yet begun.

The serious delinquency rate- percentage of loans that are 90 days or more past due or in the process of foreclosure, was 7.03%, down 28 basis points from the previous quarter and 86 basis points from the year-ago quarter.

Banks initiated fewer foreclosure actions during the quarter. The foreclosure starts rate at 0.9% is the lowest level since 2007. The total loans in the foreclosure process or the foreclosure inventory rate fell 20 basis points to 4.07 % in the third quarter from the second quarter. That is the largest quarterly drop since the survey began, although the rate is still elevated.

The nation's biggest banks including Bank of America (BAC - Get Report), JPMorgan Chase (JPM - Get Report), Citigroup (C - Get Report) and Wells Fargo (WFC - Get Report) are processing fewer foreclosures, opting instead for short sales and loan modifications as they meet their obligation under the $25 billion national mortgage settlement.

"Mortgage delinquencies decreased compared to last quarter overall, driven mainly by a decline in loans that are 90 days or more delinquent," observed Mike Fratantoni, vice president of research and economics at the Mortgage Bankers Association. "The 90 day delinquency rate is at its lowest level since 2008, and together with the decline in the percentage of loans in foreclosure, this indicates a significant drop in the shadow inventory of distressed loans-a real positive for the housing market."

Foreclosure rates in states that follow a judicial foreclosure process were still significantly higher than non-judicial states. While the foreclosure rate for judicial states decreased slightly to 6.6 percent, the foreclosure rate for non-judicial states showed a steeper drop to 2.4 percent.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
C $53.20 0.00%
BAC $15.57 0.00%
JPM $63.24 0.00%
WFC $54.36 0.00%
AAPL $127.60 0.00%

Markets

DOW 18,034.93 +208.63 1.17%
S&P 500 2,100.40 +19.22 0.92%
NASDAQ 4,994.6020 +62.7870 1.27%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs