The delinquency rate of mortgages at least one payment past due but not in the foreclosure process dropped 51 basis points from a year ago to 9.13% in the third quarter, according to the Mortgage Bankers Association. It is also a drop of 72 bps from the previous quarter. The MBA surveyed 44 million first-lien mortgages for the report. Of those, 4.34 million were 90-plus days past due or in foreclosure, representing 8.7% of all those surveyed. It’s a decrease of 15 bps from a year ago and down 41 bps from the previous quarter. Michael Fratantoni, MBA’s vice president of research and economics, said the number of loans in foreclosure dropped, bringing the serious delinquency rate to its lowest level since the second quarter of 2009. But the number of loans entering the foreclosure process increased. Of the loans surveyed, 1.34% had a foreclosure action taken, up 23 bps form the previous quarter but down 8 bps from a year ago. Fratantoni said improved delinquencies came from a more positive employment report in October, but, he said, it still remains high. “Although the employment report for October was relatively positive, the job market had improved only marginally through the third quarter, so while there was a small improvement in the delinquency rate, the level of that rate remains quite high,” Fratantoni said. “As we anticipate that the unemployment rate will be little changed over the next year, we also expect only modest improvements in the delinquency rate.” The economy added 151,000 jobs in October, and while the unemployment rate remains at 9.6%, the private sector is expected to add more jobs during the holiday season. Foreclosure starts on prime mortgages reached a new record, according to the MBA. Of all prime fixed-rate loans, 0.92% had a foreclosure initiated, a 22 bps increase from the second quarter. It is the largest quarterly increase on record. The MBA said recent foreclosure paperwork problems are unlikely to have a large impact on the third quarter data. But, Frantantoni said foreclosure inventories could increase in the next quarter and in early 2011 because of the issues. “The servicers that halted foreclosure sales temporarily may show higher foreclosure inventory numbers in the fourth quarter of 2010 and in early next year than would otherwise have been the case,” Frantantoni said. Write to Jon Prior.