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After ticking upwards last fall, the mortgage delinquency rate (over 30 days due) resumed its decline in January falling 2.2 percent from December's low. Defaults also fell from 2.24 percent in December to 2.16 percent last month.

Mortgage Delinquencies and Defaults Fell in January

After ticking upwards last fall, the mortgage delinquency rate (over 30 days due) resumed its decline in January falling 2.2 percent from December’s low. Defaults also fell from 2.24 percent in December to 2.16 percent last month.

Two separate reports today kicked the year off to a good start as both delinquencies and defaults resumed their downward paths after several months of rising defaults in the fourth quarter of last year,’

Lender Processor Services reported that the total US mortgage delinqency rate fell; to 7.97 percent in January, down 10.5 percent. However, the foreclosure pre-sale inventory rate rose 1.1 percent in January to 4.15 percent. Some 6,082,000 properties are now 30 or more days delinquent or in foreclosure. By comparison, a total of about 4.6 million existing homes were sold last year. States with the largest number of non-current loans were Florida, Mississippi, Nevada, New Jersey and Illinois.

Experian reported that after four consecutive months of increasing credit default rates, the national composite declined to 2.16 percent in January 2012 from the 2.24 percent December rate, mostly driven by a decrease in the first mortgage default rates from 2.19 percent in December to 2.08 percent in January. Second mortgage and bank card default rates also moved down from 1.33 percent and 4.60 percent in December to 1.30 percent and 4.57 percent in January, respectively.

“First mortgage default rates fell by 11 basis points in January, completely reversing the increase seen in November and December. Primary mortgage loans and, consequently, their default rates are the largest among consumer loan types, so these default rates drive the composite. Second mortgage and bank card default rates also fell in January, but not by as much. The good news is that if you look across all loan types, their default rates are all pretty close to the three-year lows they reached in 2011, and all of them are at least cut in half from their relative maximum rates, most of which occurred in 2009,” David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Indices.

“Looking at the five cities we cover, three of them had lower default rates. Los Angeles had the largest decline, moving from 2.54 percent in December to 2.36 percent in January. Chicago fell from 2.84 percent to 2.76 percent. And Dallas, which retains the lowest rate among the five cities we follow, fell to 1.53 percent from 1.56 percent. Miami default rates have risen for three consecutive months, and has the highest default rate of 4.8 0percent,” Blitzer said.

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