U.S. Mortgage Delinquencies Fall to a Seven-Year Low

The U.S. mortgage delinquency rate fell to the lowest in more than seven years in the fourth quarter as the improving job market and stricter lending standards kept more borrowers current.

Loans that were at least 30 days behind dropped to 5.68 percent from 6.39 percent from a year earlier, the Mortgage Bankers Association said in a report today. The rate was the lowest since the third quarter of 2007.

Rising home prices and the lowest jobless rate since 2008 have helped to keep newer loans current while mortgages originated before the property crash work their way through the foreclosure process. The share of loans on which foreclosure actions were started in the fourth quarter was 0.46 percent, down from 0.54 percent a year earlier.

“We’re at pre-crisis levels now,” Marina Walsh, vice president of Industry analysis for the Washington-based bankers group, said in a telephone interview. “We hope to see this improvement continue.”

Of the loans that were 90 days or more delinquent or in foreclosure, 73 percent were originated in 2007 or earlier. States that require court approval for home seizures, such as New York, New Jersey and Florida, had 3.79 percent of loans in the foreclosure process, about three times the share in non-judicial states.

New Jersey was the state with the highest rate of foreclosure starts, with 0.84 percent of loans, followed by Maryland, Mississippi, Florida, Illinois and New York.

“It comes down to judicial versus non-judicial process,” Walsh said. “New Jersey is not getting worse. New Jersey has a lengthy foreclosure timeline. It’s just a matter of working through those loans.”

Home prices have been rising as buyers compete for a limited supply of properties. The S&P/Case-Shiller index of values in 20 cities increased 4.5 percent in the year through December, the group reported Tuesday.

    Before it's here, it's on the Bloomberg Terminal.