The rate of seriously delinquent U.S. mortgages, a proxy for the so-called shadow inventory of homes, fell to the lowest since 2008 as employment improved and recovering housing demand made it easier for borrowers to sell. The percentage of home loans that were more than 90 days behind or in the foreclosure process fell to 7.03 percent in the third quarter from 7.31 percent in the previous three months, the Mortgage Bankers Association said in a report today. The rate was 7.89 percent a year earlier.
Delinquent borrowers are catching up on payments or finding alternatives to foreclosure as the U.S. economy improves. The unemployment rate dropped to 7.8 percent in September, the lowest since January 2009. A tight supply of homes is attracting buyers to distressed properties, while the federal Home Affordable Refinance Program allows Americans with little home equity to refinance, said Michael Fratantoni, the mortgage trade group’s vice president of research and economics.
“The drop of the shadow inventory is a real positive for the housing market because it reduces concerns that this backlog will be with us,” Fratantoni said in a telephone interview today from Washington. In some areas, “inventory levels of properties on market have gotten to such a point that you’re seeing buyers snap up anything that comes on the market at a rapid rate,” he said.
U.S. home prices jumped 5 percent in September from a year earlier, the biggest increase since July 2006, data provider CoreLogic Inc. said.
The percentage of loans in the foreclosure process at the end of the third quarter was 4.07 percent, down 20 basis points from the second quarter. That was the biggest decline in records dating back to 1979, Fratantoni said.
The overall U.S. mortgage delinquency rate -- the share of mortgages at least one month late -- dropped to 7.4 percent in the third quarter on a seasonally adjusted basis from 7.58 percent in the previous three months, the Mortgage Bankers Association said.
