Real Estate & Area News

Mortgage Delinqueny Rates Falls to 6-Year Low

According to a report issued this week by the Mortgage Bankers Association, the number of Americans that are behind on house payments declined for the sixth straight quarter in Q2, and now stands at 6.04 percent of all residential mortgages across the country. The report also showed the number of foreclosures is continuing to slide, with just 2.5 percent of residential mortgages slipping into foreclosure during the three months through June. That percentage marks the lowest shares of US home loans in foreclosure since 2008 and offers more evidence that the housing recovery is really gaining steam. Combined with other positive indicators for the housing market, the report could convince lenders to ease up on their credit standards and bring more Americans into the market for buying a home.

A variety of factors have contributed to the declining delinquency rates and foreclosure starts, including rising home values and homeowners refinancing into more affordable loans that lower their payments. An improving jobs picture and other improvements in the broader economy haven't hurt, either. The effects have been felt across the nation, as even markets where the foreclosure crisis hit the worst have seen delinquency and foreclosure numbers return to pre-recession levels. This return to normal pattern has hit California and Arizona, two of the states where foreclosures were the highest. Of course, those states allow foreclosures to proceed without judicial approval, so foreclosures were allowed to be processed more quickly at the height of the crisis. In states where foreclosures cannot be processed without court approval, such as New Jersey and Florida, foreclosure rates are still as much as three times the national average, and it will likely take another year or two for those states to work through backlogs of seriously delinquent home loans.

Despite the handful of states still mired in backlogs of foreclosures to process, the overall picture has improved dramatically for the US housing sector. Americans who already own homes should see the values of those homes move even higher as foreclosures continue to have less of an impact, and those looking to buy have a better chance at obtaining a loan as lenders ease up their requirements on down payments and credit scores. The market is still a slave to all the usual factors such as interest rates and demand for loans, but it appears that the market has turned a corner, and delinquency and foreclosure numbers will have less of an impact on market conditions than they have for the past six years.

August 20, 2014