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Mortgage delinquencies drop

By Judy Martel · Bankrate.com
Wednesday, May 16, 2012
Posted: 6 pm ET

Here's some more good news/bad news about the housing market. The percentage of homeowners who are delinquent on their mortgages dropped in the first quarter to its lowest level since 2008, yet loans already in foreclosure make up a larger share of overall mortgages.

The Mortgage Bankers Association reported that 11.8 percent of mortgages were in foreclosure or at least 30 days overdue, down from 12.8 percent a year ago.  When the numbers are broken down further, it turns out the percentage of delinquent borrowers has improved, from 8.3 percent a year ago to 7.4 percent at the end of the first quarter. But the percentage of homeowners in foreclosure was pretty much unchanged, at 4.4 percent.

States that require banks to go to court to initiate foreclosure proceedings have a higher percentage of homes in foreclosure than those that don't because of the difficulty of the process. States where court proceedings are required have a foreclosure rate of close to 7 percent, versus 2.8 percent for states where the process is simpler.

In states where the foreclosure rate is dropping faster, the housing market is stabilizing, according to the Mortgage Bankers Association. That's because investors and homebuyers are more confident that prices aren't going to be distorted by a high number of foreclosures.

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