Homeowner Deliquency Rate Falling

Econintersect: Is the worst behind us in the housing market?

“The pace of completed foreclosures is gradually increasing again, but the clearing ratio is falling as REO sales have slowed in the winter months. Judicial foreclosure states are continuing to process foreclosures more slowly than non-judicial foreclosure states,” said Mark Fleming, chief economist with CoreLogic. “Non-judicial foreclosure states completed almost twice as many foreclosures per 1000 active loans as judicial foreclosure states in January.”

Consider:

Both the number of homes in the foreclosure industry as well as the nationwide number of homeowners considered 90 days or more late on their mortgage (aka deliquencies) were down January 2012 compared to January 2011.

From the start of the recession back in 2008, there has been nearly 3.3 million completed foreclosures across the U.S.

The distress clearing ratio has fallen while REO sales have increased these past winter months.

To better understand these numbers it is important to understand the terms and understand their corresponding numbers:

The foreclosure inventory is basically the quanity of homes which are currently in the process of being foreclosed. In January 2012, roughly 1.4 million homes with mortgages were considered to be within the foreclosure inventory. This number is down by 0.3% from January 2011, which had around 1.5 million homes in the foreclosure inventory.

In January 2012, the percentage of borrowers who were considered 90 days or more late on paying their mortgages (this also consideres borrowers already being forclosed upon and REO) fell to 7.2%.

The distressed clearing ratio (calculated by dividing net REO sales by net completed foreclosures) for January 2012 was 0.69, down from January 2011 which saw a distressed clearing ratio of 0.80.

States also differ in the ways in which they handle foreclosures. Judicial states are currently processing foreclosures at a slower pace than Non-Judicial states.

The charts below differentiate between Judicial and Non-Judicial states, their 90 day or more deliquency rate, delinquency point change from the prior year, foreclosure inventory, foreclosure inventory point change from the prior year and net number of competed foreclosures for twelve months ending January 2012.