Serious mortgage delinquencies fall as job market improves

BOSTON – The share of U.S. mortgages that are seriously delinquent fell to the lowest in six years as the job market improved, allowing borrowers to stay current on payments while higher home prices made it easier for others to sell.

Mortgages that were more than 90 days behind or in the foreclosure process dropped to 4.8 percent of loans in the second quarter from 5.9 percent a year earlier, the Mortgage Bankers Association said in a report Thursday. That was the lowest rate since the second quarter of 2008, when it was 4.5 percent.

In Rhode Island, 7.47 percent of all residential mortgages were delinquent at the end of the quarter, the Mortgage Bankers Association said, and 2.8 percent of all mortgaged homes were in foreclosure.

Rhode Island ranked seventh nationwide for delinquencies and 12th for foreclosures started during the second quarter. Mississippi ranked first for delinquencies with a rate of 10.53 percent, while New Jersey ranked first for foreclosure starts at a rate of 0.9 percent.

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The foreclosure crisis is fading in much of the country as the economy rebounds. Employers in the U.S. added more than 200,000 workers for the sixth straight month in July and the jobless rate rose to 6.2 percent as growing confidence prompted more Americans to look for work, Labor Department figures show.

“We’re well into resolution,” Michael Fratantoni, chief economist for the Mortgage Bankers Association in Washington, said in a telephone interview. “The stronger job market means fewer people are going delinquent at the beginning of the process. The stronger housing market means if someone becomes delinquent, they’re able to sell the home before late-stage delinquency or the loan goes in the foreclosure process.”

About 75 percent of seriously delinquent loans were originated in 2007 and earlier, while mortgages from 2011 and later made up only about 6 percent, according to the report.

The share of loans on which foreclosure actions were started during the quarter fell to 0.4 percent, the lowest since the second quarter of 2006.

Home prices nationwide have been rising as lower-cost distressed listings vanish from the market. Prices climbed 7.5 percent in June, the 28th straight year-over-year increase, CoreLogic Inc. said this week.

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