Foreclosures Near Pre-Recession Levels
Another sign that the housing market is recovering: seriously delinquent mortgages fell to a five-year low during the second quarter of this year and overall foreclosures also continued to decline.
The latest data from the Mortgage Bankers Association shows that seriously delinquent home loans -those late by more than 90 days or already in the foreclosure process – dropped to 5.88 percent of all mortgages in the second quarter, down dramatically from 7.31 percent the previous year. The last time it was at that level was in the 2008 third quarter when it registered 5.17 percent. These seriously delinquent loans are generally a snapshot of the market’s ‘shadow’ foreclosure inventory.
Total delinquencies are slipping too. The combined total percentage of loans that are at all delinquent and in any part of foreclosure fell to 10.13 percent of all mortgages in the second quarter, down from 11.62 percent last year.
“For most of the country, delinquencies and foreclosures have returned to more normal historical levels. Most states are at or only slightly above longer-term averages, and some of the worst-hit states are showing improvement,” said Jay Brinkmann, MBA’s Chief Economist and SVP of Research and Economics in a press release. He added, “foreclosure starts fell or were unchanged in 43 states and the foreclosure inventory rate either improved or was unchanged in 45 states.”
Florida had the highest rate of new foreclosures, with 1.1 percent. New York had a rate of 1.07 percent and New Jersey and Connecticut were close behind.
“States with a judicial foreclosure system continue to bear a disproportionate share of the foreclosure backlog. While the percentage of loans in foreclosure dropped in both states with judicial systems and states with nonjudicial systems, the average rate for judicial states was 5.59 percent, triple the average rate of 1.86 percent for nonjudicial states.”
What this all means is that the foreclosure crisis of several years ago is steadily working itself off , which will soon leave the market to make its way back to historical norms rather than historical records.
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