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May 9 (Bloomberg) -- The rate of U.S. mortgages that are delinquent or in foreclosure fell to a four-year low as job growth helped some borrowers catch up on payments and rising demand for homes made it easier for others to sell.

Home loans that were at least one month late or in the foreclosure process dropped to 10.3 percent of mortgages in the first quarter, down from 11.25 percent in the fourth quarter and 11.33 percent a year earlier, the Mortgage Bankers Association said in a report today.

An improving job market and rebounding housing market are spurring Americans to find alternatives to foreclosure, such as loan modifications and so-called short-sales, in which homes are sold for less than the amount owed on them. Foreclosures dropped in April to the lowest level since February 2007, Irvine, California-based research firm RealtyTrac said in a report today. The U.S. unemployment rate fell to a four-year low of 7.5 percent in April, according to Labor Department data.

“The jobs are the key,” Jay Brinkmann, the Mortgage Bankers Association’s chief economist said in a telephone interview from Washington. “People with steady paychecks are less likely go into default.”

The share of mortgages at least 90 days late or in foreclosure was 6.39 percent in the first quarter, the lowest since the end of 2008, the group said. The rate was down from 6.78 percent in the fourth quarter and 7.44 percent a year earlier.

The share of mortgages in foreclosure fell to 3.55 percent from 4.39 percent from a year earlier, the biggest decline since 2008, the group said. The measure of so-called foreclosure inventory decreased in 40 states.

The share of loans on which foreclosure actions started during the first quarter was 0.7 percent, down from 0.96 percent a year earlier and the lowest level since the second quarter of 2007.

To contact the reporter on this story: Prashant Gopal in Boston at

To contact the editor responsible for this story: Kara Wetzel at

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