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Mortgage Delinquency down 26 Consecutive Quarters

January 5, 2017

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For homeowners who are behind on mortgage payments, foreclosure is not the only option.

Overall, the outlook for the delinquent mortgage rate in the U.S. is quite promising. The percentage of people behind on their real estate loan payments was 2.69 percent in the third quarter of 2016, which is the 26th-consecutive quarter where that number has declined, according to the Federal Reserve. That number is nearly 1 percentage point lower than the third quarter of 2015, according to the data.

The definition of what is considered a delinquent mortgage will vary from lender to lender, but the most common definition is that any mortgage payment more than 30 days overdue is considered delinquent, and homes are not eligible for foreclosure until a mortgage is 120 days delinquent, in accordance with Consumer Financial Protection Bureau guidelines.

Several pundits are optimistic about the mortgage industry going into the new year.

“The mortgage market has seen steady improvements over the last several years, and we believe lower unemployment rates, growth in median household income, and rising home values will be the primary drivers for continued strong performance in this sector,” Joe Mellman, vice president and mortgage business leader for TransUnion, told DS News.

Some experts attribute the low delinquency rates to a decline in the number of people who have subprime mortgages, which are some of the riskier mortgages lenders can approve. According to the TransUnion 2017 Consumer Credit Market Forecast, of the 66.9 million borrowers with a mortgage balance, only 8.5 percent of them were subprime loan holders. This indicates a two-tenths of a percent drop from 2015, the report noted.

For those falling behind on their mortgage, there is hope of refinancing. Although there are several options and individual cases will vary, the most important thing is for borrowers to talk to their lenders about why they are having trouble with their payments. From there, homeowners and lenders can work together to design a plan that will get individuals back on track with their payments.

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