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Delinquency rate falls as foreclosure rate rises for prime mortgages

[Nov 18, 2010.]


The delinquency rate on mortgage loans fell to a seasonally adjusted rate of 9.13 percent of all loans outstanding as of the end of the third quarter of 2010, compared with the previous quarter, according to a survey from the Mortgage Bankers Association. On a non-seasonally adjusted basis the rate fell to 9.38 percent from 9.4 percent. The delinquency rate includes mortgages that are at least one payment behind but not those in the process of foreclosure.

Prime mortgage loans and foreclosure

Meanwhile, the percentage of prime fixed mortgage loans that had foreclosure actions started on them rose to 0.93 percent (on a non-seasonally adjusted basis), the highest level since the survey began. Prime fixed loans account for 64 percent of all loans outstanding in the market. The foreclosure starts rate for prime adjustable-rate mortgages (ARMs) rose to 2.36 percent, 2.78 percent for sub-prime fixed loans, 4.09 percent for sub-prime ARM loans, 1.24 percent for FHA loans, and 0.86 percent for VA loans. Overall, the foreclosure starts rate for all mortgage loans rose to 1.34 percent, compared with the second quarter.

Michael Fratantoni, MBA's Vice President of Research and Economics, said in a statement:

Most often, homeowners fall behind on their mortgages because their income has dropped due to unemployment or other causes. Although the employment report for October was relatively positive, the job market had improved only marginally through the third quarter, so while there was a small improvement in the delinquency rate, the level of that rate remains quite high. As we anticipate that the unemployment rate will be little changed over the next year, we also expect only modest improvements in the delinquency rate.

Avoiding foreclosure

If you've fallen behind on mortgage payments, it's important to take action quickly to give yourself the best chance of staying out of foreclosure. Contact your mortgage lender to discuss your situation. Don't let all the media reports about "robo-signers" and other questionable practices scare you off from getting the help you need. Letting delinquency notices pile up won't help fix your situation.

Find a housing counselor

Another solution is to find a knowledgeable housing counselor who can review the situation and guide you. There may be other alternatives to foreclosure that you haven't considered that may be in your best interest. Find someone who will work in your best interest to find a solution to your mortgage problems.


About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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