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08 Nov 11 Home Loan Delinquencies Rise

With mortgage lenders continuing to offer loan modifications and mortgage relief, many industry executives were taken back by the rise in delinquencies. The new refinance program, like the expanded Home Affordable Refinance and the Emergency Homeowners Loan Program, there should be enough options for struggling homeowners. The bad credit home loan programs have narrowed with FHA new minimum credit score criteria, so this may have played a role in the increased delinquencies.

The rate at which mortgage holders were late with their payments by 60 days or more spiked in the last quarter. According to TransUnion, the delinquency rate increased in the June to September period for the first time since the last three months of 2009.  TransUnion said 5.88% of homeowners missed two or more payments, an early sign of possible foreclosure. That was up from 5.82% in the 2nd quarter.

The increase surprised TransUnion researchers, who had expected late payments, or delinquencies, to fall for the quarter. “It’s much different than we’ve been talking about the last few quarters,” said Tim Martin, group vice president of U.S. Housing in TransUnion’s financial services business unit.

The problems were widespread. Between the second and third quarters, all but 10 states and the District of Columbia saw delinquency rates increase. TransUnion’s data is culled from 27 million credit reports, about 10% of U.S. consumers who actively use some form of credit. Martin could not pinpoint one particular reason for the jump. Normally, for instance, housing prices and unemployment have a big influence on delinquency. “Those are both still important, but neither has noticeably deteriorated,” he said. In fact, unemployment was steady during the summer and the Standard & Poor’s and Case-Shiller index showed small improvements in housing prices in most major cities during July and August.

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