Late Payments on Mortgages Hit 3-Year Low

By Alex Viega

LOS ANGELES -- U.S. homeowners are getting better about keeping up with their mortgage payments, driving the percentage of borrowers who have fallen behind to a three-year low, according to a new report.

Still, the rate of decline remains slow, credit reporting agency TransUnion said Wednesday. The percentage of mortgages going unpaid is unlikely to return anytime soon to where it was before the housing market crashed.

Some 5.49 percent of the nation's mortgage holders were behind on their payments by 60 days or more in the April-to-June period, the agency said. That's the lowest level since the first quarter of 2009.

The second-quarter delinquency rate is down from 5.82 percent in the same period last year, and below the 5.78 percent rate for the first three months of 2012.

The positive second-quarter trend coincided with an improving outlook for the U.S. housing market.

10 States With the Most Underwater Homes
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Late Payments on Mortgages Hit 3-Year Low

Mortgages underwater: 24.6%
Total property value: $305.30 billion (13th highest)
Mortgage debt outstanding: $233.19 billion (13th highest)
Mortgages 90+ days delinquent: 6.6% (14th highest)

Of the state’s 2.16 million mortgages, about 529,800, or nearly a quarter of homes with mortgages, were underwater as of the first quarter of this year. Meanwhile, an additional 125,901 homes, or 5.8 percent of the homes in the states, were near negative equity. In April, 6.6 percent of those with mortgages were 90 days or more overdue on their payments, and 3.4 percent were in foreclosure -- the 10th-highest proportion in the country. While the state has the 10th-highest percentage of mortgages with negative equity, it has the seventh-highest total loan to value ratio of 76.4 percent.

Pictured: Toledo

Mortgages underwater: 24.8%
Total property value: $416.56 billion (ninth highest)
Mortgage debt outstanding: $293.50 billion (ninth highest)
Mortgages 90+ days delinquent: 7.9% (sixth highest)

Between the end of 2006 and the end of 2011, home prices in Maryland fell by 28.9 percent, the 10th-largest decline in the country. Nearly 30 percent of Maryland’s homes with mortgages either had negative equity or were near negative equity as of the first quarter of this year. Fortunately, Maryland’s economy is better than most. The state’s unemployment rate in May was 6.8 percent, and Maryland has the highest median income in the country, which should help mitigate some of the pressure on homeowners. However, while foreclosure rates in April were the 17th highest at 3 percent, the state has the sixth-highest percentage of mortgages that are 90 days or more delinquent on their payments.

Pictured: Baltimore

Mortgages underwater: 26.3%
Total property value: $46.88 billion (13th lowest)
Mortgage debt outstanding: $34.70 billion (15th lowest)
Mortgages 90+ days delinquent: 4.8% (17th lowest)

The total property value of the state of Idaho is an estimated $46.9 billion. Total outstanding debt is estimated at $34.7 billion. Between the end of 2008 and the end of last year, home prices fell by 22 percent, the third-highest decline in the country and worse than states like Florida and Arizona. Fiserv projects that the state’s housing market is making a recovery. Home prices are expected to rise by 4.1 percent in 2012 — the largest increase among all states. Between the end of this year and the end of 2013, they are expected to increase an additional 12 percent — far more than any other state.

Mortgages underwater: 28%
Total property value: $480.02 billion (seventh highest)
Mortgage debt outstanding: $368.11 billion (sixth highest)
Mortgages 90+ days delinquent: 8.8% (fourth highest)

There were 624,577 negative equity mortgages in Illinois, higher than all states except for California and Florida. Together with near negative equity mortgages, that number rises to 734,459. Homeowners in Illinois have more than $368 billion in mortgage debt outstanding, or more than three times the $112 billion those homeowners have in home equity. Some of the homeowners are in significant trouble. About 5.3 percent of all homes in the state are in foreclosure -- more than all states except for Florida and New Jersey.

Pictured: Chicago

Mortgages underwater: 30.5%
Total property value: $2,690 billion (the highest)
Mortgage debt outstanding: $1,911 billion (the highest)
Mortgages 90+ days delinquent: 6.2% (18th highest)

The California housing market is so large that it has a strong effect on national averages. About 22 percent of both the total property value and outstanding mortgage debt in the U.S. is in California. Between the fourth quarter of 2006 and the fourth quarter of last year, home prices fell in California by an estimated 46.7 percent — the fourth-largest decline in the country after only Nevada, Arizona and Florida. The state’s mortgage owners have taken a severe hit as a result. Not helping matters much is the state’s high unemployment rate. In May it was still in the double digits at 10.8 percent, the third highest in the country.

Mortgages underwater: 35.6%
Total property value: $193.15 billion (18th highest)
Mortgage debt outstanding: $161.24 billion (18th highest)
Mortgages 90+ days delinquent: 5.5% (24th lowest)

Despite more than 1 in 3 homes with negative equity, there are some positive signs in Michigan. The state was the only one on the list with rising home prices in 2011, with prices increasing a modest 1.7 percent. Meanwhile, Michigan’s unemployment rate of 8.5 percent ranked 12th in the U.S. in May. This is quite the improvement from the long period — until June 2010 — that Michigan held the dubious title of having the highest unemployment rate in the nation, topping out at more than 15 percent at the height of the recession.

Pictured: Detroit

Mortgages underwater: 37.2%
Total property value: $293.01 billion (15th highest)
Mortgage debt outstanding: $246.52 billion (11th highest)
Mortgages 90+ days delinquent: 7.2% (eighth highest)

In 2011 alone, home prices fell by approximately 12.7 percent in Georgia, more than any other state in the country. Measured from the end of 2006, home prices have plunged nearly 35 percent, and are projected to fall an additional 4.2 percent in 2012. More than 7 percent of homeowners with a mortgage are 90 days or more delinquent on their payments as of April, the eighth-highest rate in the country. In all, total outstanding mortgage debt comes to $246.5 billion, the equivalent of 84.1 percent of the total property value in the state. This is the fourth highest loan-to-value ratio in the country.

Pictured: King and Prince beach

Mortgages underwater: 43.4%
Total property value: $249.17 billion (17th highest)
Mortgage debt outstanding: $221.71 billion (15th highest)
Mortgages 90+ days delinquent: 5.8% (20th highest)

While states such as Arizona helped fuel economic growth in the mid-2000s with rising home values and new construction, the housing market began to hollow by 2007 and 2008. Case-Schiller predicts that home prices in Arizona will fall 9 percent in 2012, more than any other state. But other signs are pointing to an improving housing market, albeit modestly. When 24/7 Wall St. looked at underwater mortgages in March, 48.3 percent of Arizona’s mortgages were underwater, the second-highest rate in the country and nearly 5 percent higher than a quarter later. Meanwhile, total property value has risen a modest $6 billion between the fourth quarter 2011 and the first quarter of 2012, while outstanding debt has fallen by about $4.5 billion.

Pictured: The Grand Canyon

Mortgages underwater: 45.1%
Total property value: $777.34 billion (3rd highest)
Mortgage debt outstanding: $684.97 billion (second highest)
Mortgages 90+ days delinquent: 16.8% (the highest)

Home prices in Florida were nearly cut in half between 2006 and 2011. By the end of the first quarter, there were more than 1.9 million negative equity mortgages in the state with another 168,000 near delinquency. Homeowners in the state owe about $685 billion in mortgage payments, more than any other state except for California. Florida’s unemployment rate of 8.6 percent is above the national average of 8.2 percent, but it still could help it get out of the mortgage mess quicker than states such as California and Nevada, which have much higher unemployment rates.

Pictured: Orlando

Mortgages underwater: 61.2%
Total property value: $93.39 billion (23rd lowest)
Mortgage debt outstanding: $106.45 billion (21st highest)
Mortgages 90+ days delinquent: 12.1% (second highest)

No state has been hit harder by the housing downturn than Nevada. Between the end of 2006 and the end of 2011, home values have tanked nearly 60 percent, higher than any other state by 7.2 percentage points. In 2011 alone, home prices fell another 9.4 percent. This has left many Nevadans owing significantly more on their homes than they are worth. The average loan-to-value ratio of a Nevada home is 114 percent, 25 percentage points higher than Arizona’s 89 percent (the second highest). In May, 24/7 Wall St. reported that 71 percent of mortgages in the state’s largest city, Las Vegas, were underwater, with values declining 63.2 percent from their peak. The state’s unemployment rate is 11.6 percent, the highest of any state in the U.S., making it that much harder for many Nevadans and damping hopes of a quick recovery.

Pictured: Las Vegas


A measure of national home prices rose 2.2 percent from April to May, the second increase after seven months of flat or declining readings. Sales of new homes fell in June after reaching a two-year high in May. Sales of previously occupied homes also declined in June, but were higher than a year earlier.

Home refinancing surged in the second quarter, as interest rates sank to historic lows. And more borrowers with underwater mortgages - or home loans that exceed the value of the home - refinanced through the government's Home Affordable Refinance Program than ever before.

"More people are making their payments, and that's great," said Tim Martin, group vice president of U.S. housing for TransUnion. "I expected a little bit better, but maybe we'll see some more of that pick up in (the third quarter)."

Even as housing trends turned positive earlier this year, the U.S. economy began to show signs of faltering. The national unemployment rate remained stuck at 8.2 percent, and the pace of job growth slowed sharply, with employers adding an average of only 75,000 jobs in the April-June quarter. Hiring appeared to pick up in July, however, with employers adding 163,000 jobs.

TransUnion anticipates the mortgage delinquency rate will continue to decline. But it doesn't see it falling below 5 percent this year.

The national delinquency rate remains well above its historical range, an indication many homeowners are still struggling five years after the housing downturn.

Before the housing bust, mortgage delinquencies were running at less than 2 percent nationally. It took about three years after the housing market crashed for the delinquency rate on mortgages to climb to a peak of nearly 7 percent in the fourth quarter of 2009. The rate has been trending down since then.

Home prices need to recover further for the delinquency rate to decline.

At the state level, Florida led the nation with the highest mortgage delinquency rate of any state at 13.48 percent, down from 13.91 percent a year earlier. It was followed by Nevada at 10.85 percent; New Jersey at 8.15 percent; and, Maryland at 6.79 percent.

The states with the lowest delinquency rate were North Dakota at 1.32 percent; South Dakota at 1.94 percent; Nebraska at 2.24 percent; and, Wyoming at 2.41 percent.

Foreclosure hotbeds Arizona and California each saw marked improvement during the second quarter.

California's mortgage delinquency rate fell nearly 22 percent to 6.13 percent from a year earlier, while Arizona's declined 21 percent to 6.14.

One reason for the sharp declines in mortgage delinquency rates in those states is that homes tend to move faster through the foreclosure process than in Florida, New York and other states where the courts play a role in the process. That leads to logjams of cases involving home loans that may have gone unpaid for two years or more.

"You have states that are taking a long time to work through the delinquencies that they have, which is keeping their numbers up," Martin said.

TransUnion's research is culled from its database of 27 million anonymous consumer records.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

See also:
High-End Homeowners Racing to Sell Before Tax Cuts End
Michigan Man Buys County's Entire Foreclosure Stock

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Late Payments on Mortgages Hit 3-Year Low

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