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Borrowers keeping up mortgages

– Six years after the start of the foreclosure crisis, American homeowners are paying their mortgages as if the housing crash never happened.

First-time delinquent home loans fell to 0.84 percent of the 50.2 million mortgages in March, the first month below 1 percent since 2007, before a wave of defaults led to the financial crisis, according to a report last week by Lender Processing Services.

The rate of first-time defaults, defined as loans that went from performing to at least 60 days delinquent, peaked at 2.89 percent in January 2009.

The decline in new problem loans shows that the recovering U.S. economy, falling unemployment and rising home prices, combined with more than four years of banks’ tightening lending standards, are propelling the worst real estate crash since the Great Depression into the rearview mirror.

“Mortgage quality is improving rapidly,” Mark Zandi, chief economist for Moody’s Analytics Inc. said in a telephone interview from his office in West Chester, Pa.

“Once we’re able to work through this last bulge of foreclosed property, which I think we’ll be able to do over the next 18 to 24 months, mortgage credit quality is going to look absolutely beautiful.”

Mortgages at least 30 days delinquent or in some stage of foreclosure fell to 5 million in March, down from a peak of 7.7 million in January 2010, according to Lender Processing Services, a real estate information service based in Jacksonville, Fla.

That’s still more than double the 2.2 million non-current mortgages of January 2005, when the housing market was rising toward its peak.

Tight lending standards have made it harder for borrowers to obtain mortgages.

That has helped drive down default rates while reducing the homeownership rate in the first quarter to 65 percent, the lowest since 1995.

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