Late Mortgage Payments Up in 3Q, 1st Rise in Years

NEW YORK (AP) - While lawmakers in Washington debated the debt ceiling and consumer confidence dropped, more homeowners in the U.S. were having a harder time making their mortgage payments.

The rate that mortgage holders were late with their payments by 60 days or more rose in the June-to-September period for the first time since the last three months of 2009, according to TransUnion.

The credit reporting agency said 5.88 percent of homeowners missed two or more payments, an early sign of possible foreclosure. That was up from 5.82 percent in the second quarter of 2011.

The increase surprised TransUnion researchers, who previously forecast late payments, or delinquency, to fall for the quarter.

"It's much different than we've been talking about the last few quarters," said Tim Martin, group vice president of U.S. Housing in TransUnion's financial services business unit.

The problems were widespread. Between the second and third quarters, all but 10 states and the District of Columbia saw delinquency rates increase.

TransUnion's data is culled from 27 million credit reports, representing about 10 percent of all U.S. consumers who actively use some form of credit.

Martin could not pinpoint one particular reason for the jump. Normally, for instance, housing prices and unemployment have a big influence on delinquency. "Those are both still important, but neither has noticeably deteriorated," he said. In fact, unemployment was steady during the summer and the Standard & Poor's/Case-Shiller index showed small improvements in housing prices in most major cities during July and August.

That leaves wider economic issues having a larger role, Martin said. He pointed to the U.S. credit rating downgrade, the U.S. and European debt crises and the tanking U.S. stock markets during this period. And he noted that two different measures of consumer confidence - the Conference Board and the University of Michigan - both showed those issues hurt consumer attitudes.

That atmosphere "could make folks question paying their mortgage," he observed.

Martin said there's no real way to tell if some of the delinquency increase was driven by people who decided not to make payments because their homes are worth less than they owe on their mortgage. But it is notable that three of the 10 states that saw declines in late payments were among the hardest hit by the foreclosure crisis: Arizona, California and Nevada.

In fact, Arizona had the best rate of improvement in the nation, and now has a delinquency rate of 7.46 percent. That still places it fourth worst in the country, but the rate is vastly improved from where it stood. In the fourth quarter of 2009, Arizona's delinquency rate hit 16 percent, the highest for any state since the foreclosure crisis began.

Arizona does, however, still have the highest foreclosure rate in the nation - one in every 44 housing units with a foreclosure filing in the third quarter, according to Realtytrac.

Another possibility for the bump in the delinquency rate is that a new crop of adjustable mortgages written toward the end of the housing bubble is resetting. Even if their interest rates remain low after the adjustment, the payments might have increased, said Darren Blomquist, a Realtytrac spokesman. "We still have the bad loans mixed in that are resetting."

Although TransUnion still expects the delinquency rate to resume declining in 2012, the company is now forecasting a few quarters of elevated nonpayment rates due to the uncertain economic outlook. The company doesn't predict a return to the national peak rate of 6.9 percent, but said some increase is expected.

"More and more homeowners are likely to struggle," Martin said. "I'm not sure this is a one-quarter blip."

That echoes predictions from other sources, like RealtyTrac.

"This isn't just about bad loans anymore," said Blomquist. "It's about a bad economy that's pushing people into foreclosure."

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worked hard for twenty five years , 2007 I knocked my house down and built a new one with my own money , no loan but still had a morgage on the old house , 2008 loss my job and now I am going to have to move from the property I have owned for 20 years because I can't pay my PMI ALL TOGETHER , NEW HOMES ARE TAXED VERY DIFFERENTLY IN NJ ., AND THE INSURANCE IS HIGHER . you would think a new home work make the neighborhood more attractive and get the rest of the home owners to work and improve the property they own . Was I ever wrong about that , It's ok I will build somewhere else , maybe Arizona , looks like they would like a hard working person with the motive to keep a home and town looking great . I don't know but my taxes are 10.000 here and the same home in Glendale is 1800 , with a pool . Good BUY NEW JERSEY

November 09 2011 at 1:35 AM Report abuse rate up rate down Reply

i am on a fixed income. So i thought that i would refinance at a lower rate and get some breathing room. The cost to refinance at a lower rate is 4500. I only paid 2100 to get the loan in the first place.. Banks are blood ******* thieves. Oh my credit score is 775 so its just they have more than double the cost.

November 08 2011 at 9:53 PM Report abuse rate up rate down Reply

This is what happens when the rich speculate and increase the cost of oil and food! Let the stock market fall! I wouldn't mind $2 gallon gas again! People make the same mistakes over and over again. Gas goes up, people can't afford it, the stock market falls as people take on debts to pay for the essentials.

November 08 2011 at 3:00 PM Report abuse rate up rate down Reply

This is what happens when financial advisors/the media/the government/etc., advocate that people avoid their financial responsibilities. Yes, there have been articles here and other places that actually recommend people stop making payments on their homes.

I know that many people are seeing tough times. I'm one of them, I'm unemployeed. It's very difficult. However, I chose not to buy a house because I didn't feel that my job was secure. I was right. But no one is going to help me pay my rent. Why should the government use MY TAX MONEY to pay other people's mortgage, but not help me?

November 08 2011 at 11:01 AM Report abuse rate up rate down Reply

Would be nice to know how many total defaults since 2007 (when Barney, Harry, Chris, and Nancy took over) and the total cost to the taxpayer. I know... this is a reporters job and not The H post propaganda spin or Oh Mama regime.

November 08 2011 at 9:34 AM Report abuse +1 rate up rate down Reply
1 reply to hightest2011's comment

They say it is all Bush's fault until 2062 so you have another 50 years before you can blame the real people behind every horrible thing that has happened to this country since November 2006. It has been 5 years of pure hell, something these 5 (if you include Obama) will all learn to appreciate after they die.

November 08 2011 at 1:41 PM Report abuse +1 rate up rate down Reply

Maybe people have been trying by whatever means possible ( cashing out IRA's, savings, investments etc..) to hold on but are coming to the end of the road. And probably alot worse off to boot. I'm not sure if the average person trying to survive really spends their time worrying about Greece and Europe and downgrades etc... They are probably worried about how long their savings will keep them afloat, keeping jobs/finding work, feeding their families and the high price of everything these days.

November 08 2011 at 9:24 AM Report abuse +4 rate up rate down Reply
2 replies to Frank's comment

Public assistance is at an all time high...... doing good Barry.... pretty soon the USA will look like Greece!!!

November 08 2011 at 9:35 AM Report abuse +1 rate up rate down Reply

Thanks Frank!
Lost my job in 08, lived off my savings, and at the end of the road. There will never be a recovery unless I hit lotto. It is the hugest shame that our government is so corrupt, and everyday you hear of a new issue or ponzi scheme. Its all a house of cards, ready to fall and the governement is pretending they dont know whats going on. Thats the worst part. I say fire them all, and although they will still have money, they will know we arent kidding. We woke up and smelt the corruption.

November 08 2011 at 1:53 PM Report abuse rate up rate down Reply