The percentage of mortgage holders behind by just one payment on their loan reached its lowest level since 2007 during the third quarter — a sign that there’s light at the end of the jammed foreclosure tunnel, a quarterly survey by the Mortgage Bankers Association suggests.

The MBA survey showed foreclosure starts were also up during July, August and September — the first increase in a year — as lenders moved to foreclose on loans that have been seriously delinquent for months and in some cases years.

"While the delinquency picture changed for the better in the third quarter, the foreclosure data indicated that we are not out of the woods yet and that the issues continue to vary by geography," said Michael Fratantoni, MBA’s vice president of research and economics, in a statement.

The disparity between judicial and non-judicial foreclosure states continues to widen, with the robo-signing controversy slowing the progress of homes through the foreclosure pipeline in states where courts oversee the process.

According to a recent report by loan data aggregator Lender Processing Services Inc.,  lenders are taking an average 761 days to complete the foreclosure process on delinquent homeowners in judicial foreclosure states — six months longer than in nonjudicial states.

The MBA survey showed that 4.43 percent of all mortgages are in some stage of the foreclosure process, unchanged from the second quarter but up slightly from 4.39 percent at the same time a year ago.

The 10 states with the highest percentage of mortgages in some stage of the foreclosure process were Florida (14.49 percent), New Jersey (8.08 percent), Nevada (7.89 percent). Illinois (7.29 percent), Maine (5.67 percent), New York (5.67 percent), Ohio (4.92 percent), Indiana (4.86 percent), Connecticut (4.81 percent) and Hawaii (4.71 percent).

The 10 states with the highest foreclosure start rates were Nevada (2.48 percent), Florida (1.96 percent), Arizona (1.67 percent), Rhode Island (1.66 percent), California (1.45 percent), Georgia (1.41 percent), Illinois (1.33 percent), Tennessee (1.31 percent) Michigan (1.22 percent), and Mississippi (1.19 percent).

The MBA’s National Delinquency Survey tracks about 43.5 million mortgages on one- to four-unit residential properties, or about 88 percent of the 49.4 million U.S. homes with mortgages.

Extrapolating the survey’s findings to all mortgages suggests that there were 2.19 million homes at some stage of the foreclosure process nationwide during the third quarter. Another 3.95 million mortgages were delinquent, including 1.73 million homes whose owners were behind on their payments by 90 days or more but not yet in foreclosure.

At 7.99 percent, the overall delinquency rate was down significantly from 8.44 percent during the second quarter, and 9.13 percent a year ago. The overall delinquency rate peaked at 10.06 percent during the first quarter of 2010.

States with the highest overall delinquency rates were Mississippi (13.18 percent), Georgia (11.28 percent) Nevada (10.21 percent), Alabama (10.03 percent), Louisiana (10.03 percent), Tennessee (9.79 percent), Maryland (9.72 percent), Michigan (9.65 percent), Indiana (9.61 percent), and Ohio (9.29 percent).

Nationally, the survey showed improvement in all categories of delinquencies — 30-day, 60-day, and 90-days or more.

The percentage of mortgage holders behind by just one payment fell sharply from 3.46 percent during the second quarter to 3.19 percent. That’s down from 3.36 percent a year ago and a peak of 3.77 percent during the first quarter of 2009.

Seriously delinquent loans — those behind by 90 days or more — accounted for 3.5 percent of all mortgages, down from 3.61 percent during the second quarter and 4.34 percent a year ago.

Sometimes included in counts of "shadow inventory" because of the high probability that they will end up in lenders’ real estate owned (REO) inventories, serious delinquencies peaked at 5.02 percent during the first quarter of 2010.

Show Comments Hide Comments


Sign up for Inman’s Morning Headlines
What you need to know to start your day with all the latest industry developments
Thank you for subscribing to Morning Headlines.
Back to top
Real estate news and analysis that gives you the inside track. Subscribe to Inman Select for 50% off.SUBSCRIBE NOW×
Log in
If you created your account with Google or Facebook
Don't have an account?
Forgot your password?
No Problem

Simply enter the email address you used to create your account and click "Reset Password". You will receive additional instructions via email.

Forgot your username? If so please contact customer support at (510) 658-9252

Password Reset Confirmation

Password Reset Instructions have been sent to

Subscribe to The Weekender
Get the week's leading headlines delivered straight to your inbox.
Top headlines from around the real estate industry. Breaking news as it happens.
15 stories covering tech, special reports, video and opinion.
Unique features from hacker profiles to portal watch and video interviews.
Unique features from hacker profiles to portal watch and video interviews.
It looks like you’re already a Select Member!
To subscribe to exclusive newsletters, visit your email preferences in the account settings.
Up-to-the-minute news and interviews in your inbox, ticket discounts for Inman events and more
1-Step CheckoutPay with a credit card
By continuing, you agree to Inman’s Terms of Use and Privacy Policy.

You will be charged . Your subscription will automatically renew for on . For more details on our payment terms and how to cancel, click here.

Interested in a group subscription?
Finish setting up your subscription