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Mortgage Delinquencies Drop Year Over Year

Mortgage Delinquencies Drop Year Over YearMortgage Delinquencies Drop Year Over Year

Here’s some more good news/bad news about the mortgage market. The percentage of homeowners who are delinquent on their mortgages dropped in Q1 2012 to its lowest level since 2008, yet loans already in foreclosure make up a larger share of overall mortgages.

According to the Mortgage Bankers Association 11.8% of mortgages were deliquent, down from 12.8% a year ago. Broken down further, it turns out the percentage of delinquent borrowers has improved, from 8.3% to7.4% year-over-year. The percentage of homeowners in foreclosure was pretty much unchanged, at 4.4%.

There is a higher percentage of homes in foreclosure in judicial states where banks are required to go to court to initiate foreclosure proceedings. Due to the difficulty of the process judicial states have a foreclosure rate of close to 7%, versus 2.8% for non-judicial states where the process is simpler.

The housing market is stabilizing in states where the foreclosure rate is lower. That’s because home buyers and to some extent investors are more confident that prices will not be further distorted by a high number of foreclosures.