The number of seriously delinquent loans in the United States rose during the fourth quarter of 2009, but the number of new 30-day delinquencies fell. According to the National Delinquency Survey released today by the Mortgage Bankers Association, the number of loans that are seriously delinquent and in foreclosure rose year-over-year from 6.30 percent during the 4th quarter of 2008 to 9.67 percent during the same period of 2009. However, the number of loans that were 30 days delinquent fell from 3.85 percent to 3.63 percent during the same period.
In Colorado, the number of loans that were seriously delinquent or in foreclosure increased during 2009's fourth quarter to 5.87 percent, rising from a rate of 3.96 percent reported during the fourth quarter of 2008. The number of 30-day delinquencies were flat with an increase of only one basis point from 2.63 percent to 2.64 percent year-over-year.
Colorado reported the 11th best rate for seriously delinquent loans in the nation for the fourth quarter of 2009. The state with the lowest number of seriously delinquent loans was North Dakota with a rate of 2.46 percent. The highest rate in the nation was Florida at 20.43 percent. Nevada's rate was 19.04 percent. For the 4th quarter of 2008, Colorado reported the 18th best delinquency rate in the nation at 3.96 percent.
Although Colorado's rate of seriously delinquent loans has increased year-over-year in recent fourth quarter results, the state's rate of increase has been outpaced by growth in seriously delinquent loans throughout the United States. Colorado's rate is now only 60 percent as high as the national rate. (See graphic.)
The percentage of loans that are 30 days delinquent has remained stable in Colorado. Since 2005, the 30-day delinquency rate has increased from 2.34 percent to 2.64 percent:
Colorado delinquency rates, 4th Q
Seriously delinquent / 30-day
2005 1.97 / 2.34
2006 2.41 / 2.59
2007 3.08 / 2.36
2008 3.96 / 2.63
2009 5.87 / 2.64
The 30-day delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure.
Nationally, the percentage of loans in the foreclosure process at the end of the fourth quarter was 4.58 percent, an increase of 11 basis points from the third quarter of 2009 and 128 basis points from one year ago.
According to the Mortgage Banker's Association, a recent drop in 30-day delinquencies may be a positive sign for the economy.
“We are likely seeing the beginning of the end of the unprecedented wave of mortgage delinquencies and foreclosures that started with the subprime defaults in early 2007, continued with the meltdown of the California and Florida housing markets due to overbuilding and the weak loan underwriting that supported that overbuilding, and culminated with a recession that saw 8.5 million people lose their jobs,”said Jay Brinkmann, MBA’s chief economist.
“The continued and sizable drop in the 30-day delinquency rate is a concrete sign that the end may be in sight. We normally see a large spike in short-term mortgage delinquencies at the end of the year due to heating bills, Christmas expenditures and other seasonal factors. Not only did we not see that spike but the 30-day delinquencies actually fell by 16 basis points from 3.79 percent to 3.63 percent. Only three times before in the history of the MBA survey has the non-seasonally adjusted 30-day delinquency rate dropped between the third and fourth quarter and never by this magnitude. If the normal seasonal patterns hold for the first quarter, we should see an even steeper drop in the end of March data."
“This drop is important because 30-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures. With fewer new loans going bad, the pool of seriously delinquent loans and foreclosures will eventually begin to shrink once the rate at which these problems are resolved exceeds the rate at which new problems come in. It also gives us growing confidence that the size of the problem now is about as bad as it will get."
Data recently released by the Colorado Division of Housing showed that completed foreclosures in Colorado fell for the second year, dropping 18 percent since 2007. However, the number of new foreclosures filed reached a new record of 46,394.
In Colorado, the lack of growth in 30-day delinquencies has not yet translated into a falling or flat rate of increase for new foreclosure filings.