Mortgage delinquencies continue to climb

According to credit reporting agency TransUnion, 6.89% of mortgage payments were 60 or more days past due in Q409 - up from 4.58% in the final three months of 2008. The previous record delinquency rate was 6.25% in the third quarter of 2009. FJ Guarrera, vice president of TransUnion's financial services business unit, says the fourth-quarter uptick was due in part to normal seasonal spending shifts. Consumers are more likely to have trouble paying bills during the last few months of the year as they run low on cash because of holiday spending. But he says that even accounting for normal season patterns, there is some reason to be concerned about the pace of increase moving higher. "To see continuing growth in the first quarter would certainly raise an eyebrow."

TransUnion tracks mortgages that are two months past due as an indicator of potential foreclosure, because of the difficulty involved in coming up with three payments to bring an account current. The agency said the delinquency rate stayed highest in Nevada, at 16.2%, and Florida, at 14.9%. Arizona and California, the other two states hit hardest by the housing crisis, were third and fourth, at 11.3% and 11% respectively. The highest growth rates compared with the third quarter were in the District of Columbia, Louisiana and Delaware. Guarrera noted that many homeowners still have adjustable rate mortgages written in late 2006 or early 2007 due to reset to higher rates in coming months, and that could drive foreclosures even higher, especially in areas where home prices have fallen to the point where values are lower than mortgages. "We're not out of the woods yet," he said.