The overall delinquency rate for single-family mortgages fell to 9.47% of all loans at the end of the fourth quarter 2009, down 17 basis points (bps) from Q309, according to the Mortgage Bankers Association (MBA) Q409 delinquency survey. Despite this, the survey finds nearly 4.3m mortgages either delinquent or in foreclosure in Q409. The MBA adds that 9.67% of the nation's more than 44.4m mortgages are seriously delinquent - 90+ days past due or in foreclosure. Although fewer new delinquencies in the quarter brought the overall rate down by year-end, the bucket of serious delinquencies of 90 or more days swelled. And with fewer seriously delinquent loans moving into foreclosure, the "shadow" inventory of US properties bound for foreclosure looks likely to rise. As it stands, clearing the backlog of shadow inventory homes is likely to take nearly three years to complete according to credit rating agency Standard & Poor's. "The good news is that it looks like the problems are going down," said MBA chief economist Jay Brinkmann in a press call Friday. "While long-term delinquencies are still increasing...what we saw this quarter frankly surprised us." MBA noted a surprising decline in new delinquencies entering the system in Q409, a break from the seasonal trend of rising new delinquencies from Q3 to Q4. The rate of loans becoming 30 days past due dropped 16 bps drop from Q309 to Q409. The difference between Q3 and Q4 "has never been negative to this extent," Brinkmann said in the call. "This drop is important because 30-day delinquencies have historically been a leading indicator of serious delinquencies and foreclosures," he said in an e-mailed press statement. "With fewer new loans going bad, the pool of seriously delinquent loans and foreclosures will eventually begin to shrink once the rate at which these problems are resolved exceeds the rate at which new problems come in. It also gives us growing confidence that the size of the problem now is about as bad as it will get." Offsetting the good news in new delinquencies is the rate of 90+ days or "serous" delinquencies, which rose 82 bps from the previous quarter to 9.67%: At the same time, foreclosure starts dropped 22 bps to 1.2% of loans. "[T]hat would normally be good news," Brinkmann said, but now it means loans are building up in the 90-day delinquent bucket. He acknowledged some percentage of these serious delinquencies are bound to end up in foreclosure. And although foreclosure starts are down, overall foreclosure inventory rose 11 bps in Q409 to 4.58% of all loans. The sand states - California, Florida, Nevada and Arizona continued to lead foreclosures in metropolitan areas in December 2009, according to the year-end 2009 Metropolitan Foreclosure Market Report from online foreclosure marketplace RealtyTrac. Although RealtyTrac did not report specific quarterly data, it noted in a statement that "[d]espite the increase in December, foreclosure activity in the fourth quarter decreased 7% from the third quarter, although it was still up 18% from the fourth quarter of 2008." Write to Diana Golobay.