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Are Mortgage Markets Turning the Corner?


On a quarterly basis, the last quarter of 2009 looked better for home loan defaults. While the third quarter showed 9.64% of all mortgage loans late, the last quarter was down a bit to 9.47%. This is according to the National Delinquency Survey posted by the Mortgage Bankers Association. The significance of the slight reduction is that it is the first time that's happened since 2006. It's good news, but not great, as this is still 1.59% higher than the same quarter of 2008.

While those percentages were for all mortgages that were late, there's another good showing from those mortgages only one payment late, the new arrivals, so to speak. That percentage fell from 3.79% the third quarter to 3.63% the last quarter of 2009. There's another reason this single late payment rate looks good. Typically at the end of the year, there's a spike in late payments due to increased heating bills. So, with the mortgage market as bad as it's been, to see a decline of new late mortgages in the last quarter is good news.

What many are watching with concern is the "strategic default." These are homeowners not late on payments, and able to make their payments. They just walk away, as the value of their homes has fallen well below the balance on their mortgages. Called "jingle mail," they just mail in their keys. If this trend also declines, there may be a brighter future ahead for the mortgage market.

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