The number of American borrowers that fell behind on their mortgage payments declined sharply at the end of 2009, a sign that the US foreclosure crisis is beginning to ease.
The Mortgage Bankers Association said that the number of borrowers who missed out just one payment for their mortgage dropped to 3.6 percent in the fourth quarter of last year, from 3.8 percent in the previous quarter. The decline was remarkable because delinquencies usually rise during this time of the year due to holiday spending and higher heating bills.
The new trend in late mortgage payments is important because this means that the number of foreclosures in the US will continue to drop this year, and it is also important for all homeowners in areas where lower priced foreclosures are bringing down neighbouring values.
For example, homes in high-foreclosure cities like Miami, Phoenix and Las Vegas lost half of their values during the peak.
But the report also showed that Florida, Arizona and Nevada had the biggest drop in new delinquencies.
Jay Brinkmann, a chief economist in a trade group, said that the report will likely mark “the beginning of the end” of mortgage delinquencies and the foreclosures that started more than three years ago.
However, over 15 percent of US homeowners are in foreclosure or have a missed mortgage of at least one payment, a record for the 10th-straight quarter.
“The bad news is that we still have a big problem,” said Mr. Brinkmann. “The good news is it looks like it may not get much bigger.” However, there will be short-term pain as the number of American borrowers who were at least three months behind their payments still continues to rise.
Across the US, over 5 percent of home loans fell into that category in Q4, up from 4.4 percent in the previous quarter.
Many of the home borrowers are being evaluated for help under the US$75 billion mortgage relief effort of the Obama administration.