by Bill McBride on 11/25/2014 04:13:00 PM
Tuesday, November 25, 2014
Freddie Mac reported that the Single-Family serious delinquency rate declined in October to 1.91% from 1.96% in September. Freddie's rate is down from 2.48% in October 2013, and this is the lowest level since December 2008. 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 October in a few days.
Click on graph for larger image
Although this indicates progress, the "normal" serious delinquency rate is under 1%.
The serious delinquency rate has fallen 0.57 percentage points over the last year - and at that rate of improvement, the serious delinquency rate will not be below 1% until late 2016.
Note: 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 Fannie and Freddie distressed sales for perhaps 2 more years (mostly in judicial foreclosure states).