Serious Delinquencies Move Downward in Latest Poll

The serious mortgage delinquency rate in the 100 largest metropolitan areas showed a slow but steady downward trend from 10.4 percent at its peak in December 2009 to 9.3 percent in June 2011, according to new data from Foreclosure-Response.org. The serious delinquency rate is the share of loans in foreclosure plus the share of loans delinquent 90 or more days. Its decline has been driven primarily by a decrease in delinquent loans, which dropped from 5.5 percent in December 2009 to 3.7 percent in June 2011. The average foreclosure rate has flat-lined at 5.5 percent over the three quarters ending in June. In Riverside and Stockton, Calif., the foreclosure rate decreased the most, down 1.9 percentage points and 1.7 percentage points, respectively, from the peak in December 2009. The Florida, New York, and Illinois metros experienced steadily rising foreclosure rates, climbing, for instance, 2.8 percentage points in Tampa, 2.3 percentage points in Chicago, and 2.1 percentage points in New York City between December 2009 and June 2011. These three states require judicial foreclosure proceedings, in which a court must make the final decision about whether a property can exit foreclosure. This process can create a significant backlog of foreclosures. "The foreclosure inventory that is building up is going to take an incredibly long time for lenders to clear," said Urban Institute research associate Leah Hendey. "At the current pace of foreclosure sales, we are looking at a process that could take decades to complete. It is critical that the status of these properties be resolved quickly if we want to stabilize communities and housing markets." Between 2006 and 2010, mortgage originations declined in all of the 100 largest metropolitan areas. These drops ranged from 39 percent in Buffalo, New York, to 82 percent in Miami, Fla.