Balance for Seriously Delinquent Mortgages Hits 5-Year Low
By: Esther Cho
The total balance for seriously delinquent first mortgages decreased to a five-year low as rising home prices reduce incentives to default, Equifax stated in its National Consumer Credit Trends Report.
In June, the balance of loans 90 days or more past due or in foreclosure fell to $325 billion, down 27 percent from last year when the balance stood at $450 billion. Loans originated in 2010 or later represented about 7 percent of the balance for seriously delinquent mortgages.
When only considering first mortgages in foreclosure, the balance was $105 billion in June, which is also a five-year low. The balance represents a 38 percent decrease from a year ago.
At the same time, the balance for loans that completed the foreclosure process and became bank-owned diminished as well, falling by more than 19 percent to $13.5 billion—the lowest level for June since 2007, according to the Atlanta-based Equifax.
“The implications of this trend are that more homeowners will be able to sell their homes without the hassles of negotiating a short sale or move to take a new job without worrying how they can afford to pay for two homes. The healing in the housing market is really gaining momentum and will fuel a stronger pace of economic recovery,” said Amy Crews Cutts, Equifax chief economist.
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