While foreclosure starts remain high, the longer term foreclosure picture is improving as evidence mounts that delinquencies‒though still very high‒are declining, despite the economy.
The number of foreclosure starts declined slightly in August, but was still 20 percent higher in August 2009, according to the August Mortgage Monitor by Lender Processing Services released yesterday. As of August month end, there had been more than 2 million foreclosure starts in 2010.
Though delinquencies remain at historically high levels, serious delinquencies were down 11 percent from 2009 and the inventory of mortgages over 30 days delinquent was down 14.5 percent year-over-year.
Though the serious state of distress the economy faced a year ago has eased, delinquencies are far from under control. In January 2009, the percent of seriously delinquent loans that were current six months prior peaked at 2.92 percent; in August 2010 that rate was 1.65 percent, but approximately 1.01 million loans that were current at the beginning of January are at least 60 days delinquent or in foreclosure as of the end of August – a month-over-month increase of 115,000 loans from July.
In August, nearly ten percent of mortgage holders were delinquent 30 days or more (9.22 percent), which represents an improvement over last year, when the delinquency inventory was 9.71 percent. The delinquency inventory peaked at 10.97 percent in January. Both delinquency inventories and foreclosure inventories fell markedly in March, when the homebuyer tax credit stimulated demand.
The overall volume of delinquent loans returning to current status continued the downward trend in August. Cures spiked in March and have fallen through the summer.
While the delinquency inventory is high, it is an improvement over 2008 and 2009 at this point in the year. Approximately 1,010,000 loans that were current at the beginning of January are at least 60 days delinquent or in foreclosure as of August month end. In 2009 there were 1,683,000 delinquent loans in August tyat were current in January. In 2008, there were 1,062,000.
LPS Summary
Total U.S. loan delinquency rate: 9.22 percent
Total U.S. foreclosure inventory rate: 3.8 percent
Total U.S. non-current loan rate: 13.02 percent
States with most non-current loans: Florida, Nevada, Mississippi, Georgia, Illinois
States with the fewest non-current loans: North Dakota, South Dakota, Alaska, Wyoming, Montana
