The New York Times has posted an article that discusses how the actual number of delinquent mortgage payments among homeowners has actually started to decrease, even amid the foreclosure fighting that has been happening.
David Streitfeld, writer of the article, says that households who were behind on mortgage payments fell during this year’s 3rd quarter from 14.42% to 13.52%. This is the lowest delinquency percentage since the housing crisis began in early 2009.
One reason delinquencies declined during the summer months was because banks reduced the numbers by offering loan modifications to some homeowners and not others. Mortgages that were delinquent 3 or more months fell from 9.11% to 8.70%.
Even with this encouraging drop, the number of foreclosures and delinquent mortgages is still above average. Foreclosures are no longer being caused by bad loans, which was responsible for a large part of the recession. Fixed rate loans, which are the “safest” type of loan, represented 36% of new foreclosures in the 3rd quarter, which is a rise from 30% of the same quarter last year. However, foreclosures from the worst kind of loan (adjustable subprime) have sharply decreased.
Elizabeth A. Duke, a Federal Reserve Board governor, said in her testimony that the central bank expected about 2.25 million foreclosure filings this year and in 2011, and two million more in 2012.
“They will remain extremely high by historical standards,” Ms. Duke said in her prepared testimony. In 2006, before the collapse, there were about one million foreclosures a year.
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