Mortgage delinquencies edge down

The number of Americans falling behind on their mortgage payments dropped slightly in the third quarter, encouraging news for those who fear a fresh wave of defaults brought on by stubborn joblessness. But the decline was too small to indicate the foreclosure crisis will be over any time soon.

The Mortgage Bankers Assn. said 9.1% of homeowners had missed at least one mortgage payment during the third quarter, a decline from 9.9% in the second quarter and 9.6% in the third quarter of 2009.

Perhaps most notable was the decline in newly delinquent home loans — those in which the borrower is behind by 30 days. The number had ticked up for two consecutive quarters, to 3.5% of all loans in the second quarter, before falling to 3.4% in the third quarter.

Michael Fratantoni, vice president of research and economics for the association, said the troubled economy continued to be the biggest factor driving people to fall behind on their home payments and enter foreclosure.

"Most often, homeowners fall behind on their mortgages because their income has dropped due to unemployment or other causes," he said. "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."

There was a slight increase in new foreclosure starts in the third quarter, to 1.3% from 1.1%, as more severely delinquent loans moved into the repossession process. But the percentage of U.S. loans in foreclosure at the end of the third quarter declined slightly to 4.4%, from 4.6% in the previous quarter and 4.5% in the third quarter of 2009.

In separate housing news, mortgage rates jumped dramatically this week amid a sell-off of bonds, according to data released Thursday.

The rate for a 30-year fixed-rate mortgage averaged 4.39% with an average 0.9% in upfront fees, up from last week's 4.17% rate, according to Freddie Mac's primary mortgage market survey. The rate for a 15-year fixed-rate mortgage averaged 3.76% with 0.7% in lender fees, up from last week when the rate averaged 3.57%.

Mortgage rates have been at or near record lows since April and have been an important factor in stabilizing the nation's housing market. A significant increase in rates would put further downward pressure on home prices.

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