LOS ANGELES -- Fewer home loans are going bad these days, the Mortgage Bankers Association said Friday in its quarterly delinquency report.
At the same, the group's data showed that a record number of Americans were in danger of losing their homes in the fourth quarter.
Still, the trade group focused on signs that the housing markets are healing.
"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, continued with the meltdown of the California and Florida housing markets due to overbuilding and the weak loan underwriting that supported that overbuilding, and culminated with a recession that saw 8.5 million people lose their jobs," Jay Brinkmann, the group's chief economist, said in a statement.
Mike Larson, a real estate and interest rate analyst at Weiss Research, called the report an encouraging indicator "pointing toward broad-based stabilization," but he cautioned about overreacting to the good news.
"This is a key sign that housing market conditions are slowly, grudgingly, getting slightly better," Larson said. "This does not mean we'll have a vigorous recovery. We won't. Many loan [modifications] will fail, the unemployment rate remains elevated, and lending standards will remain relatively strict for some time."
The Mortgage Bankers Association said the delinquency rate for mortgage loans on one-to-four-unit residential properties fell to a seasonally adjusted rate of 9.47 percent of all loans as of the end of the fourth quarter of 2009 from 9.64 percent in the third quarter.
Such a decline is exceedingly rare, Brinkmann said in a conference call, because consumers in the fourth quarter are buying Christmas presents and face a rise in heating bills.
Loans delinquent by 30 days and by 60 days declined compared with the third quarter of 2009 and the fourth quarter of 2008. The number of loans going into foreclosure, though up from a year earlier, declined compared with the third quarter as efforts to modify mortgages took hold.
But the "bucket" of loans more than 90 days past due - containing the mortgages being evaluated for modifications - continued its rise to record levels, indicating that there is still much short-term pain for the housing markets as many of these fall into foreclosure.
The group said 4.99 percent of all prime fixed-rate loans - the kind made to the best-qualified borrowers - were categorized as seriously delinquent (that is, in foreclosure or more than 90days past due), up from 2.25percent a year earlier.
For prime adjustable-rate loans - the category containing tricky pay-option mortgages - 18.13 percent were seriously delinquent, compared with 10.45percent a year earlier.
And 42.7 percent of subprime adjustable loans were seriously delinquent, up from 33.78 percent in the fourth quarter of 2008.
Brinkmann noted that the mortgage trends mirror those in the job market.
"We have a hard-core block of unemployed who have been out of jobs for a long time, and that's keeping the long-term delinquencies high," Brinkmann said in an interview with Bloomberg News.
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The number of showings and pending sales also increased in April compared to the same period last year. Keep up with the latest business stories with our free e-mail newsletter, delivered straight to your inbox!
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President Barack Obama last year pledged to spend $275 billion to keep as many as 9 million Americans in their homes by refinancing properties that are valued at less than their mortgages and offering incentives to companies that modify terms for delinquent borrowers. The government also is offering a tax credit of as much as $8,000 for homebuyers who complete purchases before July 1.
The administration's Home Affordable Modification Programresulted in 116,000 permanent loan modifications by the end of January, compared with a goal of as many as 4 million by December 2012, the Treasury Department said in a Feb. 17 report. About 57 percent of permanent modifications were for borrowers coping with unemployment or a reduction in working hours or wages.
In addition, 830,438 trial modifications were under way, the Treasury Department said in the report.
For more information on HAMP, go makinghomeaffordable.gov. For help in fighting your foreclosure, go to www.fightncforeclosure.org or call 866-234-4857.
Bloomberg News
