Rise in the mortgage delinquency rate as of 2nd Quarter, 2009
Mortgage delinquency rate has hit an all time high in the second quarter of 2009. Though the pace of growth for the delinquency rate has slowed down, yet there has been an increase in mortgage delinquencies in the past 2 years. According to a report published by TransUnion (a credit reporting agency), mortgage delinquency has increased by 65% from the second quarter of 2008.
Studies reveal that in most cases, mortgage delinquency of 60 days always leads to a foreclosure. This is because it is really difficult to get current on mortgage payments, after defaulting on a home loan for 2 consecutive months.
Though the mortgage delinquency rate has increased by 16% in the first and second quarters of 2009, yet it has only increased by 11.3% from the first quarter to the second quarter. According to F. J. Guarrera, the Vice President of TransUnion’s financial service division, the slowdown in mortgage delinquency rate is a good sign. Though the exact reason behind this slowdown is unknown, yet it might be due to the hardship programs, which were aimed at helping the distressed homeowners. According to Guarrera, consumers have also become extra careful in managing their finances.
According to a survey carried out by TransUnion, mortgage delinquency rate has increased in some states in the second quarter of 2009. US states Florida, Nevada, California and Arizona experienced the highest rate of mortgage delinquency during this time. Delinquency rate in Nevada jumped from 11.6% in the first quarter to 13.8% in the second quarter of 2009. In Florida, the rate increased from 11% in the first quarter to 12.3% in the second quarter. The survey also revealed that North and South Dakota showed lowest delinquency rates in second quarter of 2009.
The state of Ohio demands a special mention in this regard. In this state, delinquency rate has decreased from 4.58% in the first quarter to 4.57% in the second quarter of 2009. According to Guarrera, this is a sign of recovery even though all the states do not support this phenomenon.
TransUnion expects an increase in national mortgage delinquency rate in 2009. However, it predicts that the delinquency rate may not exceed 7%. If it happens, then it will be a better condition in comparison to last year’s delinquency rate. It is expected that it’ll take quite some time before the national delinquency rate gets back to its normalcy, that is, between (1.5 – 2) percent.
