Mortgage delinquencies in the first quarter were down 174 basis points when compared to a year earlier, the Mortgage Bankers Association said Thursday, although the percentage of U.S. mortgages in delinquency increased to a rate of 8.32% on a seasonally adjusted basis at March 31, up 7 bps from the end of 2010. Overall, the trade association declared national foreclosure and delinquency numbers an improvement, with year-over-year figures showing clear declines in both foreclosures and delinquencies. At the same time, the MBA warned national foreclosure statistics are dependent on local state numbers that are skewed due to state laws and regulations varying the length of the foreclosure process. The MBA delinquency rate includes mortgages at least one payment past due, while excluding loans already in the foreclosure process. The MBA noted a decline in foreclosure actions, with the percentage of loans in foreclosure in the first quarter hitting 1.08%, a drop of 19 bps from fourth quarter and down 15 bps from year-ago levels. About 4.52% of all mortgages were in foreclosure at March 31, a decline of 12 bps from the fourth quarter and an 11 basis point drop from a year earlier, the MBA said. Meanwhile, the serious delinquency rate — a measure of loans that are 90-plus days past due or in foreclosure — hit 8.1%, a drop of 50 basis points from the fourth quarter and down 144 bps from a year earlier. When combining the rate of loans in foreclosure with delinquencies, the rate of total loans in distress hit 12.31% on a nonseasonally adjusted basis, down from 13.6% in the previous quarter. "Most of these numbers continue to point to a mortgage market on the mend," said Jay Brinkmann, the MBA's chief economist. "Short-term delinquencies remain at pre-recession levels.  Loans 90 days or more delinquent have now dropped for five straight quarters and are at their lowest level since the beginning of 2009. Foreclosure starts are at the lowest level since the end of 2008 and had the second largest drop ever." Despite signs of improvement in delinquencies and foreclosures, Brinkmann noted that all national statistics are somewhat skewed when considering local market conditions are the key determinate when people assess housing conditions in the greater economy. For now, areas like Florida remain a clear problem, Brinkmann said. "Twenty-four percent of all mortgages in the country that are in foreclosure are in Florida and 23% of the loans in Florida are anywhere from one payment past due to in foreclosure," Brinkmann said. "Yet 38 states have foreclosure rates that are below the national average. We have areas of recovery but those numbers are often overwhelmed by the bad numbers still coming out of a few large states." Brinkmann said foreclosure delays caused by varying state laws are causing distressed loans to hang on the books longer in judicial foreclosure states. "The states with the largest decreases in loans in foreclosure were California, Arizona and Michigan. Each of these six states had declines in loans 90 days or more past due and in the rate of new foreclosures started," Brinkmann explained. "What differentiated those with increases in the percentage of loans in foreclosure? Florida, New Jersey and Illinois have judicial foreclosure processes that lengthen the foreclosure timeline and increase the number of loans that sit in foreclosure, all other things being equal." Write to: Kerri Panchuk.