Loan delinquencies are on the rise again for the first time since the end of 2009, an ominous sign for a housing market that has yet to gain its footing in a battered economy. News of the 5.88% increase in delinquencies at the end of the third quarter came as a surprise to TransUnion, which compiles the data. The downturn spells more trouble for Fannie Mae and Freddie Mac.
The Chicago-based credit information provider said the housing market reversal came after six consecutive quarters in which the number of consumers making timely mortgage payments increased–a trend TransUnion executive Tim Martin expected to continue.
Martin blames economic shocks for the change in trend; in a TransUnion release issued Tuesday he cited “the U.S. credit rating downgrade, stock price declines, European debt concerns, stubbornly high unemployment, more downward pressure on home values and low consumer confidence. All of this affects a borrower’s net worth and desire, or ability, to continue making house payments–especially if they are facing negative equity in their homes due to price depreciation.”
It is estimated that more than one-quarter of all households hold mortgages worth more than their houses. The TransUnion third quarter report shows that mortgage delinquencies rose in 40 states and in 64% of U.S. metropolitan areas. Just 21% of U.S. metropolitan regions saw an increase in delinquencies in the second quarter, a difference TransUnion called “significant.”
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Florida, Nevada and New Jersey have the highest rate of delinquency, at 14.08%, 12.39% and 7.6%, respectively. Vermont and New Jersey had the highest year-over-year changes in delinquency rates, up 15.58% and 7.5%, respectively. North Dakota has the lowest mortgage delinquency rate in the nation, at 1.47%.
The TransUnion data adds a layer of gloomy confirmation to housing market woes that were heightened earlier this week when mortgage finance company Fannie Mae, which is in U.S. government conservatorship, requested an additional $7.8 billion in government support. The company posted a $5.1 billion loss in the third quarter compared with a $1.3 billion loss the previous year.