Freddie Mac reported that the Single-Family serious delinquency rate declined in November to 2.43% from 2.48% in October. Freddie’s rate is down from 3.25% in November 2012, and this is the lowest level since March 2009. Freddie’s serious delinquency rate peaked in February 2010 at 4.20%.
These are mortgage loans that are “three monthly payments or more past due or in foreclosure”.
Note: Fannie Mae will report their Single-Family Serious Delinquency rate for November next week.
Click on graph for larger image
Although this indicates progress, the “normal” serious delinquency rate is under 1%.
The serious delinquency rate has fallen from 0.82 percentage points over the last year – and at that rate of improvement, the serious delinquency rate will not be below 1% until mid-to-late 2015.
Very few seriously delinquent loans cure with the owner making up back payments – most of the reduction in the serious delinquency rate is from foreclosures, short sales, and modifications.
So even though distressed sales are declining, I expect an above normal level of distressed sales for another 2+ years (mostly in judicial states).