Mortgage Delinquency Rate Climbs to New Record in 3rd Quarter

MortgagesThe mortgage delinquency rate reached a record 9.64 percent of all loans outstanding for the third quarter of this year, according to the Mortgage Bankers Association.
That compares to 9.24 percent in the second quarter of this year, and 6.99 percent in the third quarter of last year. The delinquency rate breaks the record set last quarter.  The records are based on MBA data dating back to 1972.
The delinquency rate refers to loans that are at least one payment past due, but does not include loans somewhere in the foreclosure process. The percentage of loans in the foreclosure process for third quarter 2009 was 4.47 percent, an increase from 4.3 percent in the second quarter, and of 17 basis points from the second quarter of 2009 and 2.97 percent from the third quarter of last year.
“Despite the recession ending in mid-summer, the decline in mortgage performance continues,” said Jay Brinkmann, MBA’s Chief Economist. “Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in GDP.”
Brinkmann said the number of seriously delinquent loans increased in the past year by almost 2 million loans, sending the rate of new foreclosures from 1.07 percent to 1.42 percent in the same period.
The bleak news on mortgage delinquencies comes on the same week as major credit card issuers reported a continuing climb in late payments for October. Late payment figures for card issuers represent customers who are at least 30 days behind in their payments.
The credit card late payments are troubling to the card issuers because they mostly move in the same direction as the unemployment rate, which reached 10.2 percent this month, the highest level since 1983. Moreover, the jobless rate is expected to climb higher in coming months.
These major credit card providers saw hikes in 30-plus late payments: Capital One reported 5.72 percent last month, up from 5.38 percent in September; Discover said delinquency rates on loans packaged into bonds rose to 5.72 percent in October, higher than 5.57 percent in the earlier month.
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