14% of US Mortgage Holders in Foreclosure or Late – First Quarter 2010

A mortgage crisis continues to plague the United States, as made evident in 2010’s first quarter report, released by the Mortgage Bankers Association (MBA).

The MBA stresses that loan delinquency is a continuing trend among Americans who own one-to-four unit residential properties, which saw an increase to a seasonally adjusted rate of 10.06%. Foreclosure actions that were started during the first quarter also saw a three basis points rise from 2009’s fourth quarter, now standing at 1.23%; however, that’s down 15 basis points from one year ago.

The United States delinquency rate includes loans that are at least one payment past the due date, but loans are not included within the process of foreclosure. At the end of the first quarter, 4.63% was the figure attached to loans still in the foreclosure process – an increase of five basis points from last quarter and 78 basis points from one year ago – ultimately representing a record high.

All in all, the combined percentage of loans still in foreclosure with or without at least one payment made past the due date stands at 14.01% according to MBA’s 2010 first quarter report. This figure was measured on a non-seasonally adjusted basis, which saw a decline from 15.02% in 2009’s fourth and final quarter.

However, as Mark Huffman of ConsumerAffairs.com mentions, there is a hint of improvement as it relates to those who are behind on their house payments.

The serious delinquency rate, the percentage of loans that are 90 days or more past due or in the process of foreclosure, was 9.54 percent, a decrease of 13 basis points from last quarter, but an increase of 230 basis points from the first quarter of last year.

Huffman’s article goes on to quote MBA Chief Economist Jay Brinkmann, who relays caution regarding seasonally adjusted numbers.

“The issue this quarter is that the seasonally adjusted delinquency rates went up while the unadjusted rates went down,” said Jay Brinkmann, MBA’s chief economist. “Delinquency rates traditionally peak in the fourth quarter and fall in the first quarter and we saw that first quarter drop in the data. The question is whether the drop represents anything more than a normal seasonal decline or a more fundamental improvement. Most importantly, the normal seasonal drop is coming right at the point where we believe delinquencies could potentially be declining and the problem for the statistical models is determining which is which.”

Brinkmann says the seasonal models suggest it is not a fundamental improvement and that the seasonal drop should have been larger to represent a true improvement. Yet, he says, there is reason to believe the seasonally adjusted numbers could be too high.

“Simply put, fundamental market factors may be having a greater influence on the delinquency rates than is normally the case, but mathematical models have difficulty discerning the difference over a short period of time,” he said.

Drawing up any conclusion from the words of Brinkmann, the MBA Chief Economist, would be really subjective right now because as the situation stands right now, the fundamental market could be getting better or worse, there’s no clear direction yet. So as the first quarter of 2010 stands, patterns of declination in short-term delinquency rates have continued that’s a definite problem for the real estate market in the United States.