Mortgages in foreclosure hit record high, while home loan delinquencies drop

Several major lenders halted foreclosures in October to probe possible problems with foreclosure paperwork, including "robo-signing" when managers quickly signed off on foreclosures without closely examining the paperwork. 

Those issues then led to a temporary halt in foreclosure sales, particularly in states where repossessions go through the courts, such as New Jersey, Florida and Illinois, according to the MBA’s quarterly national delinquency survey.

The percentage of mortgage loans somewhere in the foreclosure process was 4.63 percent, tying the survey's record high from the first quarter of 2010, up from 4.39 percent in the third quarter and 4.58 percent in the fourth quarter of 2009, according to survey.

Foreclosure actions on loans were down 1.27 percent in the fourth quarter and down from 1.34 percent in the third quarter, but still were up 1.2 percent from a year ago, according to the report

The delinquency rate fell to a seasonally adjusted 8.22 percent of all loans outstanding through the fourth quarter, down from 9.13 percent in the third quarter and 9.47 percent in the fourth quarter of 2009. The delinquency rate includes mortgages that are at least one month past due but excludes loans in the process of foreclosure. 

"These latest delinquency numbers represent significant, across-the-board decreases in mortgage delinquency rates," said Jay Brinkmann, MBA's chief economist.

Mortgages only one payment past due are now at the lowest level since the end of 2007, the very beginning of the recession and loans that are 90 days or more past due have fallen nearly 28 percent in about a year. Every state but two saw a drop in the 90-plus day delinquency rate and the two increases were negligible, the report said. 

"While delinquency and foreclosure rates are still well above historical norms, we have clearly turned the corner," Brinkmann said. "Absent a significant economic reversal, the delinquency picture should continue to improve during 2011."   

The survey covers 43.6 million loans on one- to four-unit residential properties, or about 88 percent of all first-lien residential mortgage loans outstanding. There were a smaller number of mortgage loans included in the survey, down about 389,000 compared with the third quarter and 850,000 fewer loans than those included in the fourth quarter of 2009 survey.