LOS ANGELES (AP) — A resurgent housing market, rising home values and steady job gains are helping more U.S. homeowners stay on top of their mortgage payments.
The percentage of mortgage holders at least two months behind on their payments fell by 21 percent in the first three months of this year versus the same period in 2012, credit reporting agency TransUnion said Wednesday.
The sharp annual decline in the mortgage delinquency rate represents the biggest quarterly drop on record for TransUnion, whose data go back to 1992.
"We certainly expected improvement this quarter, as the housing sector is in recovery, but the magnitude of the improvement was unexpected," Tim Martin, TransUnion's group vice president of U.S. housing, said in a statement.
All told, the mortgage delinquency rate was 4.56 percent in the first quarter. That's down from 5.78 percent in the prior-year quarter, TransUnion said.
The first-quarter rate also fell 12 percent compared with the last three months of 2012, when it was 5.19 percent, a four-year low.
Even so, the mortgage delinquency rate is still above the 1 percent to 2 percent average historical range, an indication that many homeowners still are struggling to make their payments.
Before the housing bust, mortgage delinquencies were running at less than 2 percent nationally. They peaked at nearly 7 percent in the fourth quarter of 2009.
The rate has been trending down since then, aided by a rebound in home sales and rising home prices that began gaining traction about a year ago.
U.S. home prices rose 10.5 percent in March compared to a year earlier, the biggest gain since March 2006, according to real estate data provider CoreLogic. March marked the 13th month in a row that home prices have increased on an annual basis nationwide.
Rising home values make it easier for borrowers to refinance their mortgages or sell their homes if they lose their jobs or otherwise become unable to make payments. They also help bring down the number of homeowners who are underwater on their mortgage, or owe more on their home loan than their homes are worth.
Last year, 1.7 million homeowners who had been underwater on their mortgage were moved into positive equity, according CoreLogic. That left another 10.4 million, or nearly 22 percent of all homes with a mortgage, still in negative equity at the end of last year.
Steady job growth also has helped.
Employers have now added an average of 208,000 jobs per month from November through April. That's much higher than the average of 138,000 in the previous six months. And the national unemployment rate, while still elevated, fell last month to 7.5 percent from 7.6 percent in March.
Every state and the District of Columbia posted an annual decline in the late-payment rate of home loans in the first quarter, with Arizona leading the way. The state's mortgage delinquency rate was 4.3 percent, down nearly 38 percent from a year earlier, TransUnion said.
California, with a rate of 4.2 percent, and Colorado (2.7 percent) also had steep annual declines in the rate of late payments.
Florida, a foreclosure hotbed throughout the housing downturn, clocked in with the highest mortgage delinquency rate in the nation for the January-March quarter at 11 percent — but that's down nearly 21 percent from the same period last year, the firm noted.
Nevada (9.1 percent), New Jersey (6.9 percent) and Delaware (6.3 percent) rounded out the top four states with the highest late-payment rate.
Meanwhile, mortgage debt per borrower dipped about 1.2 percent to $186,018 in the first quarter from a year earlier, and was essentially flat with the previous quarter, the firm said.
TransUnion, which draws its data from a sample of 27 million consumer records, anticipates the national mortgage delinquency rate will continue to decline in the current quarter to about 4.5 percent.
"There is no reason to believe the decline in mortgage delinquencies will not continue," Martin said. "We do not know if the first quarter was a blip, or if it's the beginning of a more rapid decline."


Read more: http://www.sfgate.com/business/personal-finance/article/Late-payment-rate-on-mortgages-tumbled-in-1Q-4496755.php#ixzz2Su1SrYd1

How Difficult Is the Mortgage Process for Buyers? Posted: 08 May 2013 04:00 AM PDT TD Bank recently announced the results of their inaugural Mortgage Service Index. The index was designed to identify best practices and trouble areas in home financing and act as a service indicator for lending institutions. Below are some of the key findings of the survey. Positive Experiences The index identified the percentage of respondents who had a positive (“excellent” or “very good”) experience in certain parts of the home buying experience: 64% had a positive experience during the home buying experience 55% finding a good Realtor 55% with the home appraisal/inspection process 53% finding the right lender 53% with the length of the entire home buying process What Creates an Overall Positive Experience? Certain key aspects of the relationship with the lender were important to those who said they had a very positive overall home buying experience. They rated their lender as “excellent” or “very good” in the following categories: Responsive 74% Accessible 76% Honest and transparent 76% Instilled confidence throughout the process 73% Helped buyers understand the process 73% Kept buyer informed during process 73% Explained the mortgage and available options 72% Other Key Findings: 1. On average, home buyers considered approximately two banks or lenders when applying for a mortgage 2. An equal number of those surveyed (43%) obtained information on the lending process from their bank and from their Realtor, demonstrating that Realtors are used as informative resources by consumers during the mortgage process 3. Only 34% of home buyers obtained a mortgage at their primary bank

Housing Crash Fades as Defaults Decline to 2007 Levels By John Gittelsohn

Six years after the start of the foreclosure crisis, American homeowners are paying their mortgages like the housing crash never happened.

First-time delinquent home loans fell to 0.84 percent of the 50.2 million mortgages in March, the first month below 1 percent since 2007, before a wave of defaults led to the financial crisis, according to a report today by Lender Processing Services Inc. The rate of first-time defaults, defined as loans that went from performing to at least 60 days delinquent, peaked at 2.89 percent in January 2009.

The decline in new problem loans shows that the recovering U.S. economy, falling unemployment and rising home prices, combined with more than four years of banks’ tightening lending standards, are propelling the worst real estate crash since the Great Depression into the rearview mirror.

“Mortgage quality is improving rapidly,” Mark Zandi, chief economist for Moody’s Analytics Inc. said in a telephone interview from his office in West Chester, Pennsylvania. “Once we’re able to work through this last bulge of foreclosed property, which I think we’ll be able to do over the next 18 to 24 months, mortgage credit quality is going to look absolutely beautiful.”

Mortgages at least 30 days delinquent or in some stage of foreclosure fell to 5 million in March, down from a peak of 7.7 million in January 2010, according to Lender Processing Services, a real estate information service based in Jacksonville, Florida. That’s still more than double the 2.2 million non-current mortgages of January 2005, when the housing market was rising toward its peak.

Lending Standards
Tight lending standards have made it harder for borrowers to obtain mortgages, helping drive down default rates while reducing the homeownership rate in the first quarter to 65 percent, the lowest since 1995.

The Federal Housing Administration, which offers loans to buyers with downpayments as low as 3.5 percent, has steadily raised its credit scores. In the third quarter of 2012, the most recent available, 97 percent of FHA borrowers had credit scores above 620 of a possible 850. In the last quarter of 2006, only 53 percent had a score above 620.

New mortgage default rates are highest among so-called “underwater” borrowers, who have negative equity because they owe more on their home than the balance of their loan, said Herb Blecher, senior vice president at LPS Applied Analytics.

The new default rate was 4 percent for borrowers who owe at least 50 percent more than the value of their home compared with 0.6 percent for owners with equity, according to today’s report.

Negative Equity
The number of home loans with negative equity fell to about 9 million or 18 percent of homes with a mortgage in January, the report said. That’s down 41 percent from a year earlier and 47 percent lower than the peak of 17 million loans in February 2011.

U.S. home prices climbed at the fastest pace since May 2006, rising 9.3 percent in February from a year earlier, according to an April 30 report by the S&P/Case-Shiller index of property values.

There’s a “feeding frenzy in housing” as Americans seek to take advantage of prices still about 29 percent below their 2006 peak and mortgage rates near record lows, said Ross Perot Jr., 54, chairman of Dallas-based real estate company Hillwood Development Co., in a telephone interview. Perot’s father, H. Ross Perot, twice ran for president as an independent candidate.

‘Very Shrewd’
“The big picture: this economy is coming back,” Perot said during a telephone interview from Newport Beach, California, where he was breaking ground on a condo project backed by his Dallas-based company. “The American people are very shrewd and they realize it’s a great time to borrow to buy a home because pricing is very cheap.”

The average rate for a 30-year fixed mortgage dropped to 3.35 percent last week, down from 3.84 percent a year ago as the Federal Reserve has bought $85 billion of bonds to stimulate the economy. The average 15-year rate is a record low 2.56 percent.

Demand is also rising as more Americans find jobs. The unemployment rate fell to 7.5 percent in April, its lowest rate since December 2008, the Labor Department reported May 3. The Dow Jones Industrial Average last week rose above 15,000 for the first time.

Builders continued to hire more workers in April, though employment among an age cohort important to household formation slipped, according to today’s jobs report, which showed more overall growth than expected.

Residential construction jobs are up 4.1 percent year over year, towering about the overall jobs growth rate of 1.6 percent, said Trulia Chief Economist Jed Kolko, citing data released by the Bureau of Labor Statistics today.

Total residential-construction jobs moved up from a seasonally adjusted 580,200 in March to 586,400 in April, according to the report. In April of last year, the sector supported 572,000 jobs, the report showed.

But that jobs growth lags compared to actual construction growth. Kolko chalks up the discrepancy to the fact that the number of jobs for every construction project is more than normal.

At the same time, today’s report also showed that employment among a cohort that is crucial to household formation, 25 to 34-year-olds, has slipped recently, dropping from 75.6 percent in December 2012 to 75.2 percent in April, Kolko said.

But Fannie Mae Chief Economist Doug Duncan said that the report was positive overall and “better-than-expected.

“The unemployment rate, which dipped 0.1 percentage points to 7.5 percent, truly indicates improving market conditions as a large gain in employment outpaced a decent gain in the labor force. One soft spot was a sizable drop in average weekly hours, which fell for the first time in three months,” he said in a statement.

Duncan added that a survey that Fannie Mae will release next week is expected to show that the housing market “is gradually approaching its sweet spot as the share of consumers who believe that it is a good time to buy remains high while the share of those who think it is a good time to sell continues its upward trend witnessed over the past year.”

“The unemployment rate, which dipped 0.1 percentage points to 7.5 percent, truly indicates improving market conditions as a large gain in employment outpaced a decent gain in the labor force. One soft spot was a sizable drop in average weekly hours, which fell for the first time in three months,” he said in a statement.

Duncan added that a survey that Fannie Mae will release next week is expected to show that the housing market “is gradually approaching its sweet spot as the share of consumers who believe that it is a good time to buy remains high while the share of those who think it is a good time to sell continues its upward trend witnessed over the past year.

Gallup: Latest Data on Homeownership [INFOGRAPHIC]

Lending Standards: Are They Actually Loosening?

In a recent story on MSN Money titled, Mortgage Borrowing Is Getting Easier, it was revealed that:

“Credit is not raining down on would-be borrowers, but it will be a bit more accessible this year.”

The article bases it findings on the Federal Reserve’s January Survey of Loan Officers. Dan Greene of the Daily Mortgage Report addresses the survey:

“The Q4 2012 survey marks the ninth straight survey in which fewer than 10% of banks tightened standards. Many more are loosening instead. It’s a good sign for the 2013 home purchase market, which has shown strong buyer demand and rising home prices. Despite what you may hear from friends and neighbors, the nation’s banks are no longer tightening their respective mortgage lending standards.”

In the article, Cara Hawkins, a production manager at Ameripro Fundingalso weighed in on the subject:

“There are more players in the mortgage buying ‘game’ than in past years, which opens the door to looser credit standards because the appetite for loans on the secondary market is higher. While it is still fairly black and white when it comes to mortgage qualification, I am seeing an increase in more approvable loans than in past years because of the market opening up.”

And a recently released report from FICO/PRMIA, US Consumer Credit Risk Trends and Expectations showed:

Expectations among bank risk professionals for the relaxation of lending standards increased sharply, rising from 12.1 to 19.9 percent

Why Are Lending Standards Easing?

The FICO/PRMIA report revealed two reasons for the industry’s current comfort with the housing market.

1. 83.7% believe that the level of mortgage delinquencies will decrease or stay the same, a significant improvement over last quarter.
2. 70.8% feel that home prices were rising at a sustainable pace.

The Niche Report also covered the FICO/PRMIA report explaining:

“One out of five bank risk professionals now expect the approval criteria for loans to become less stringent, the third highest level ever registered for looser lending standards in the three year history of the FICO survey.”

What Will This Mean for the Real Estate Market?

Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs, said it best:

“The latest survey results, combined with data that indicates the real estate market is improving in many regions, paint a positive picture for a sector of the economy that has been slow to join the recovery. Mortgage lenders have been understandably guarded over the past five years. The improvement in their sentiment should be welcome news, and I wouldn’t be surprised to see lenders cautiously expanding their mortgage and home equity lending businesses.”