Delinquencies Swell to 11% in Q309, says Foresight Analytics

Total delinquencies for first-lien residential mortgages grew to an estimated 11% during Q309, according a report from California-based real estate market consulting firm Foresight Analytics. The final figures for the third quarter are not due until the end of November, but Foresight’s report bases its data on earnings reports and call report filings from banks. Residential delinquencies increased from 10.2% in Q209 and from 6.4% from the second quarter of 2008, according to the report. Except for a two-percentage point jump in Q408, the delinquency rate rose approximately 1% every quarter since the Q108. “We have been expecting the rate of increase to slow, but clearly this has not yet occurred,” according to the report. Nonaccrual rates for residential mortgages also jumped to 4.7% in Q309 from 3.8% in the previous quarter – a record high since 1992 when Foresight began reporting on the data. The increase represents a reclassification of serious delinquencies as nonaccrual, according to the report. A previous surge in 90 plus day delinquencies came in Q408 and in Q109 as lenders delayed the nonaccrual categorization in favor of working with borrowers on loan modifications and other cures, according to the report. Delinquencies in commercial mortgages also ballooned for the quarter. The rate hiked to 4.7% in Q309 from 4.1% in the previous quarter and more than doubled the 2.1% rate a year ago, according to the report. “The delinquency rate has been increasing at an accelerated rate since Lehman Brothers’ collapse in September 2008 and the ensuing severe credit crunch and economic downturn,” according to the report. The delinquency rate in commercial loans is still well below the 8% delinquency rate in the third quarter of 1991, but the rate still worries analysts in light of a weak economy, constricted credit availability and a large number of commercial mortgages coming due the next few years. Write to Jon Prior.

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