Rainier

-A smaller percentage of mortgages
were delinquent and the rate of those entering the foreclosure process
slowed in the fourth quarter of 2009, possible signs that the
foreclosure crisis that has gripped many of the nation’s housing markets
is finally starting to ease, a trade group has reported.

“We are likely seeing the beginning of the end of the unprecedented wave
of mortgage delinquencies and foreclosures that started with the
subprime defaults in early 2007,” said Jay Brinkmann, chief economist of
the Mortgage Bankers Association, in a written statement.

The delinquency rate for mortgages on one- to four-unit residential
properties was a seasonally adjusted 9.47% of all mortgages outstanding
in the fourth quarter, down from 9.64% in the third quarter and up from
7.88% in the fourth quarter of 2008, according to the MBA’s quarterly
delinquency survey.

Delinquencies include mortgages that are at least one payment or more
past due but not yet in foreclosure.

Meanwhile, 1.2% of outstanding mortgages entered the foreclosure process
in the fourth quarter, down from 1.42% in the third quarter and up from
1.08% in the fourth quarter of 2008. The percentage of mortgages at some
point in the foreclosure process at the end of the fourth quarter was
4.58%, up from 4.47% in the third quarter and 3.3% in the fourth quarter
of 2008.

The MBA survey covers about 44.4 million loans on one- to four-unit
residential properties, or about 85% of all first-lien residential
mortgage loans that are outstanding in the country. No doubt, the
foreclosure nightmare isn’t over yet.

The percentages of loans 90 days or more past due and loans in
foreclosure process set record highs in the fourth quarter, according to
the report. Many of those loans more than 90 days past due are in loan
modification programs, and some of them have been seriously delinquent
for months waiting for modifications to get finalized.

But the good news is there are fewer problem loans actually entering
delinquency—likely a result of fewer layoffs, Brinkmann said. “We
normally see a large spike in short-term mortgage delinquencies at the
end of the year due to heating bills, Christmas expenditures and other
seasonal factors. Not only did we not see that spike but the 30-day
delinquencies actually fell by 16 basis points from 3.79% to 3.63%,” he
said. He added that the non-seasonally adjusted 30-day delinquency rate
has only dropped three times in the past between the third and fourth
quarter—”and never by this magnitude.”

Depending on the fate of seriously delinquent mortgages—whether they
are cured with modifications or ultimately enter foreclosure—the
percentage of mortgages somewhere in the foreclosure process could start
to see a gradual decline in the second half of the year, he said during
a conference call with reporters.

If normal seasonal patterns hold, there could be a bigger drop in the
30-day delinquency rate in the first quarter of 2010, Brinkmann said.
That would be a positive sign for the months and years ahead. “The
continued and sizable drop in the 30-day delinquency rate is a concrete
sign that the end may be in sight,” he said. “With fewer new loans going
bad, the pool of seriously delinquent loans and foreclosures will
eventually begin to shrink once the rate at which these problems are
resolved exceeds the rate at which new problems come in. “It also gives
us growing confidence that the size of the problem now is about as bad
as it will get,” he said.

According to the MBA data, Florida was the most problematic state, in
terms of delinquencies. Twenty-six percent of Florida mortgages were one
payment or more past due at the end of the year, and 20.4% of mortgages
in the state were 90 days or more past due or already in the foreclosure
process.