Number of Delinquent Mortgages on the Rise Again

After several quarters of improvements, the number of U.S. homeowners who are late on their mortgages increased in the second quarter, according to a survey by the Mortgage Bankers Association (MBA).

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The second-quarter mortgage delinquency rate rose to 8.44 percent of all mortgage loans outstanding, according to the MBA's Mortgage Deliquency Survey. That is an increase of 0.12 percent from the previous quarter, but is still down 1.41 percent from the same period a year ago.

"While overall mortgage delinquencies increased only slightly between the first and second quarters of this year, it is clear that the downward trend we saw through most of 2010 has stopped," MBA's Chief Economist Jay Brinkmann said in a statement. "Mortgage delinquencies are no longer improving and are now showing some signs of worsening."

The delinquency rate includes loans that are at least one payment past due, but does not include loans in the process of foreclosure.

Foreclosure starts, which make up 0.96 percent of all loans, were down 0.12 percent from the previous quarter. Loans in the foreclosure process fell to 4.43 percent, down slightly quarter-to-quarter and year-over-year.

"The good news is the continued decline in long-term delinquencies, those mortgages that are three payments or more past due," said Brinkmann. "The bad news is that drop is offset by an increase in newly delinquent loans one payment past due."

Overall, 12.54 percent of all U.S. mortgage loans outstanding are either late in payments or in the foreclosure process, and that is up 0.23 percent from the previous quarter. That's still down 1.43 percent from the same quarter a year ago, and off a peak of around 14 percent.

The data suggest that persistently high U.S. unemployment rate is making it harder for people to keep up on their mortgage payments, and offer a grim outlook for a housing sector.

"Mortgage loans that are one payment, or 30 days, past due are very much driven by changes in the labor market, and the increase in these delinquencies clearly reflects the deterioration we saw in the labor market during the second quarter," Brinkmann said.

The greatest percentage of foreclosures continued to be highly concentrated in five states: Florida (14.4 percent); New Jersey (8.0 percent); Illinois (7.0 percent); New York (5.5 percent); and California (3.6 percent).