12:01AM EST December 12. 2012 - Here's some good news on home loan delinquencies.
If not for all the homeowners who haven't paid their mortgages in more than a year, the nation's home loan delinquency rate would be only slightly higher than normal, shows new research from credit monitor TransUnion.
The delinquency rate would fall to about 2.5%, down from more than 5%, if those borrowers were excluded, says Tim Martin, TransUnion vice president.
Before the foreclosure crisis and housing bust, the normal mortgage delinquency rate was about 1.5% to 2%, TransUnion says.
The company expects the mortgage delinquency rate -- which looks at borrowers 60 or more days past due -- to finish this year at 5.32% and to drop only slightly to 5.06% by the end of next year.
The nation's higher-than-normal mortgage loan delinquency rate is not driven by new loans. "It's a lot of folks ... who have been delinquent for a really long time," Martin says.
Before the recession, it was unusual for a borrower to go more than 180 days without either being able to fix their situation or go through the foreclosure process, TransUnion says.
At the end of October, homes that went through a foreclosure sale were delinquent an average of 728 days, mortgage tracker Lender Processing Services says. That was up from 497 days two years earlier.
If the pace of improvement in curing delinquent loans doesn't pick up, national home loan delinquency rates will take another four years to get back to normal, TransUnion says.
More than 80% of the nation's currently delinquent home loans were originated before 2008, TransUnion's data show. The pre-2008 loans make up 54% of all mortgages, it says.
TransUnion predicts the biggest declines in mortgage delinquency rates next year will occur in several states that were hit hardest by foreclosures. Nevada will see a 19% drop. California and Arizona will post 12% declines.
In all of those states, foreclosures don't go through the courts so they can occur more rapidly than they typically do in states where foreclosures do go through the courts.
Thirteen states will see mortgage delinquency rates rise next year, TransUnion says.
They are largely states that have lower delinquency rates now compared with the national average, TransUnion says, and include North Dakota, South Dakota and Nebraska.
Despite likely increases next year, those three states will end 2013 with the lowest mortgage delinquency rates in the nation, TransUnion predicts.
North Dakota, which is experiencing an energy boom, will be at 1.5% of home loans being 60 or more days late. Nebraska and South Dakota will come in at about 2.3%.
Florida will have the highest delinquency rate at almost 12%, followed by Nevada at just over 8%.
The national mortgage delinquency rate peaked in the fourth quarter of 2009 at 6.89% after rising 12 consecutive quarters from its 1.9% mark in the fourth quarter of 2006, TransUnion says.