Tuesday, February 22, 2011

Bright Spot for Mortgages: Missed Payments Ease

According to a new report from the Mortgage Bankers Association, the percent of mortgage holders who are at least one payment past due or whose homes have been repossessed fell to the lowest levels in recent years. The rates declined 0.22% to 13.56% at the end of 2010, which is the lowest level since 2008.

CNN reports:

    Loans one payment past due were at 8.22%, down considerably from the 9.13% mark at the end of the third quarter and the lowest rate since the end of 2007, the beginning of the recession, the bankers said.

    That, according to Michael Fratantoni, vice president of research and economics for the MBA, was very welcome news.

    "I think we've turned the corner as concerned with loans 30 days late," he said. "It indicates that the economy has improved."

    A second factor in the improvement is that mortgage underwriting has gotten so much stricter over the past few years, in the wake of the housing market collapse, that many of the loans most likely to fail have already done so.

    The most dangerous years for mortgages are the third and fourth years, when delinquency rates peak, according to Fratantoni. The crop of mortgages entering into those dangerous years should not default as much because borrowers were so well qualified.

Read more here

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