Mortgage Arrears Fall, Foreclosure Woes Persist
By Joe Light
The percentage of home owners falling behind on their mortgages in the first quarter fell to the lowest level since mid-2007, but some states continued to struggle to work through a large inventory of loans in foreclosure.
At the end of the first quarter, about 5.54% of loans were at least one payment past due after adjusting for seasonal factors, according to the Mortgage Bankers Association, an industry group. That was down from 5.68% in the fourth quarter and 6.11% in the first quarter of 2014.
The mortgage market continued to benefit from rising home prices and an improving job market, said Joel Kan, the MBA’s associative vice president of industry surveys and forecasting.
Home prices nationwide rose 5.9% in the year through March 2015, CoreLogic reported on Tuesday. Last week, the Labor Department said the employment-cost index, a measure of wage and benefit expenses, rose 0.7% in the first quarter, more than 0.6% increase economists expected.
But there are more signs that some parts of the mortgage market are settling into a pattern that is worse than before the housing boom and bust.
After falling rapidly from a peak above 4.5% in mid-2010, the percentage of loans in the foreclosure process has started to flatten out at between 2% and 2.5%, above the 1% to 1.5% rate seen between 2001 and 2005.
In the first quarter, about 0.45% of loans had foreclosures started on them, a rate nearly flat with the previous quarter a year ago.
Mr. Kan said part of the backup in foreclosures can be attributed to longer processing times that have come as a result of mortgage-servicing rules introduced since the financial crisis, as well as to significant backlog of delinquent loans in some states that have a long judicial foreclosure process.
States with especially large foreclosure backlogs include New Jersey and New York, which at the end of the first quarter had 7.67% and 5.51% of loans, respectively, in foreclosure, compared with less than 2.5% for most other states.
“It’s going to take several years before the backlog of foreclosures works its way through the system,” said Peter Grof, deputy to the president for New Jersey Community Capital, a nonprofit community development group.
From The Wall Street Journal
