The national mortgage delinquency rate declined for the fourth consecutive quarter, decreasing from 5.41% in the third quarter of 2012 to 5.19% in the fourth quarter of 2012, a credit reporting agency said Tuesday.
On a year-over-year basis, the mortgage delinquency rate — the rate of borrowers 60 days or more past due on their mortgages — dropped nearly 14% from 6.01% last year, according to a survey by TransUnion.
"The national mortgage delinquency rate experienced its largest yearly decline since the conclusion of the recession, though we still remain far above normal levels," said Tim Martin, group vice president of U.S. housing in TransUnion's financial services business unit.
He added, "For the most part, newer vintage mortgage loans are not the reason for the stubbornly high delinquency rate. They are performing relatively well."
In 2007, mortgage delinquencies hit 54% and continued to decline, reporting 53% in 2008 and 50% in 2009, the survey stated.
The subsequent decline was a slow process with delinquency levels declining 7% in 2010, 6% in 2011 and 14% in 2012, according to TransUnion.
"The elevated delinquency levels that we still are experiencing are a result of older vintage loans — borrowers who haven't been making their payments for a rather long time that are still in the system, inflating the overall rate," Martin said.
For the fourth quarter, 37 states and the District of Columbia posted improvements in mortgage delinquency rates from the previous quarter. Additionally, only three states did not report mortgage delinquency progression from last year, the survey said.
About 81% of Metropolitan Statistical Areas posted a yearly decline in their mortgage delinquency rates, with Los Angeles leading the way, falling 33.6%.
Click on the chart to view highest mortgage debt states as well as lowest mortgage debt states.
Moreover, TransUnion noted that mortgage delinquency rates will continue to trend downward in the first quarter of 2013. Although, rates will remain above 5%.
"The declines in the mortgage delinquency rate will likely be muted for the foreseeable future as the foreclosure process in some states can take more than 1,000 days," Martin said.
He added, "It’s not clear yet, but recently announced regulatory rules related to mortgage servicing may tend to slow down this process further."