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Home Loan Delinquencies Drop Again

Delinquencies Drop For the 4th Month In A Row

Delinquencies Drop For the 4th Month In A Row

Orange County, CA – Delinquencies on home loans have lowered significantly. Consistently rising home value levels coupled with a steadily improving US economy have helped homeowners maintain their mortgage payments. We have now seen four straight months of decreasing reports on mortgage delinquencies according to the most recent report from the Mortgage Bankers Association.

If we look at data from the credit bureau Transunion we can see that the delinquency rate fell to 5.19% between October and December 2012. This shows a drop from Q3 and almost a full percentage point drop from this time last year. We have to note however, that the TransUnion figures include all of their delinquent mortgages even 90 days and beyond. This means that we are looking at older vintage loans and we’re talking about loans pre dating 2010. It’s clear from the figures that recently taken loans are performing better than the older loans, but this also shows that the older loans are skewing the more recent data.

Since 2010, loans have been built upon firmer ground with lower loan to values and lower debt to income ratios. These days LTV is capped for most ARM’s, and DTI has a hard cap which can be as low as 43%. If there’s a FICO below 620 it will require special treatment.

Of course, all of this makes for a market which is far less likely to see delinquencies occur. By the very nature and make-up of the mortgages available to the average Joe, we’re going to see fewer delinquencies.

As we’d expect, there are variances across the states. Florida and Nevada are both extremely high, but this correlates with the fact that during 2004 and 2008 both states offered a significant level of high LTV loans. It’s also the case that states which embarked on fewer speculative loans during that period of time tend to have lower delinquency rates today. North and South Dakota, Nebraska and Alaska can all be found in the lower tier of mortgage delinquencies.

Changes in delinquency figures are almost always followed by similar figures for foreclosures, which of course makes sense. This likelihood could actually see the U.S. home resale inventory reduce in size. Further reduction in housing supply would lead to higher property prices across the nation.

If you want to know how this impacts you then the best advice is to speak to a mortgage consultant. We can help you analyze your situation in relation to the market at the moment. We’re always ready to listen to what you have to say in order to help you to understand your options. Get in touch today so we can help you to make the right decisions.

Scott Storace

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