Consumer and Mortgage Loan Delinquencies Fell in May 2012

In June 2012, Equifax, one of the three credit bureaus, released their May National Consumer Credit Trends Report. This report included mortgages, home equity loans, and student loans. Write-offs and delinquencies for all categories declined. Mortgage delinquencies experienced the most decline.

First Mortgages

First mortgage delinquent balances were $450 billion in May 2012, compared to $700 billion in January 2010, which was the peak. This was a decrease of 37 percent.  Approximately 70 percent of outstanding delinquencies among first mortgages were tied to loans opened between 2005 and 2007.

Severely delinquent (90 day or more past due or in foreclosure) non-agency (not Fannie Mae, Freddie Mac, FHA or VA) first mortgage loans totaled $320 billion In May 2012, compared to $580 billion in January 2010, which was the peak. This was a decrease of 45 percent.

Severely delinquent (90 day or more past due or in foreclosure) agency-sourced (Fannie Mae, Freddie Mac, FHA and VA) first mortgages totaled $130 billion in May 2012, compared to $142 billion in January 2010 or a decrease of 9 percent.

Total mortgage write-offs through May 2012 decreased 28 percent from their 2010 peak.

Home mortgage debt was $8.6 trillion in May 2012, compared to $9.8 trillion in October 2008, which was the record high. This was a decrease of 12.5 percent.

Home Equity

Home equity revolving balances were $560 billion in May 2012, compared to $680 billion in May 2009, which was the peak.  This was an 18 percent decrease in three years.

Home equity revolving accounts total credit limits were $1.02 trillion in May 2012, compared to $1.30 trillion in March 2008, which was the peak. This was a 21.5 percent decrease.

Severely delinquent (90 day or more past due) home equity installment loans totaled $615 million in May 2012, compared to $880 million in February 2011, which was the peak.  This was a decrease of 31 percent.

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Student Loans

Student loan write-offs totaled $4.6 billion year-to-date through May 2012, compared to $4.8 billion in May 2011 or a 4.2 percent decrease. This was still the second highest total in seven years.

Total student loan amounts opened year-to-date March 2012 totaled $12.9 billion, compared to $16.1 billion a year earlier or a 19.7 percent decrease.

The total balance of existing student loans was $750 billion in May 2012, compared to $390 in September 2007, which was the lowest point in 56 months.  This was an increase of 92 percent.

“That severe mortgage delinquencies are trending downward is not surprising given generally improving economic conditions,” said Equifax Chief Economist Amy Crews Cutts. “What is surprising is that even with the foreclosure moratoriums and the slow resolution of foreclosure backlogs, the downward trend has been a steady, consistent drumbeat of recovery,” “If this pace continues, we expect the volume of severely delinquent mortgage balances to return to mid-2007 levels by the end of 2014.”