Mortgage Delinquencies Have Declined the Most in Past Three Years

In May 2012, Equifax and Moody’s Analytics released the results of their joint product – National Consumer Credit Trends Report.  This report was based on data from March 2012 on first mortgages, home equity revolving credit, and home equity installment loans.  First mortgage loan delinquencies were the lowest since January 2009; revolving home equity loans were the lowest in five years; and the majority of home equity credit line delinquencies were from accounts opened from 2005 to 2007.

First Mortgages

First mortgage delinquencies in March were under $500 billion; this is the lowest since January 2009.

The number of first mortgages totaled 49.5 million in March 2012, compared to 55 million in March 2008, which was an 11 percent decrease. The decrease was due mainly because of high foreclosures, loan payoffs and low home buyer demand.

First mortgage balances were 3.5 percent below the level a year ago. This declining trend has continued for 36 consecutive months.

Seventy-one percent of all first mortgage delinquencies were from loans taken out in 2005 to 2007.

First mortgage loans moving from current to 30-days past due were the lowest since June 2007.

First mortgages going from 60-days past due to 90 days past due were the lowest in 59 months.

Loans ninety days or more past due or that have started the foreclosure process have continued to decrease over the past 24 months, and totaled $477 billion as of March 2012.

Home Equity Revolving Credit

Home equity revolving is also referred to as home equity line of credit (HELOC) and is a credit limit with a variable rate for a specified number of years.

Most (79 percent) of the home equity credit line delinquencies were from those opened from 2005 to 2007.

Existing home equity revolving credit balances dropped 17 percent from March 2009 to 2012, as hew home loans struggled and more foreclosures were written off.

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Home equity revolving is also referred to as home equity line of credit (HELOC) and is a credit limit with a variable rate for a specified number of years.

New home equity lines of credit opened in January 2012 were 16 percent higher than the recession low of $4.3 billion in Jan. 2009, but 67 percent lower than Jan. 2008 ($15.2 billion).

Utilization rates, the ratio of balance to credit limit, stayed at or near 55 percent since March 2009, although the available credit declined from $575 billion to less than $470 billion.

Home Equity Installment Loans

Home equity installment loans are loans at a fixed rate and time frame based on the equity in your home; they are also referred to as second mortgages.

Revolving home equity loans were the lowest in five years, with 11.5 million loans outstanding as of March 2012.

Home equity installment balances were $150 billion in March 2012, compared to $275 billion in March 2008 or a decrease of 46 percent.

In March 2012, delinquent home equity installment loans were $604 million, compared to $862 million a year earlier, or a 30 percent decrease. This was the lowest since mid-2007.

Home equity installment loan delinquency rates were 14 percent lower in March 2012, compared to a year earlier.

“The residual effect from the recession and housing bust continues to be an obstacle for both lenders and borrowers in the housing market,” said Equifax Chief Economist Amy Crews Cutts. “We’re seeing effects of the economic recovery within existing accounts in the form of fewer delinquencies and foreclosures, but not a substantial amount of new activity as home sales and resulting new home financing fail to keep pace with payoffs and foreclosures.”