Fewer are behind on home loans

WASHINGTON -- The number of borrowers falling behind on their mortgage payments dropped sharply at the end of last year, a sign the foreclosure crisis is beginning to ebb.

The Mortgage Bankers Association said Friday that the percentage of borrowers who missed just one payment on their home loans fell to 3.6 percent in the October to December quarter, down from 3.8 percent in the third quarter. The decline was even more surprising because delinquencies usually rise at that time of year due to higher heating bills and holiday spending.

The new trend in late payments is significant because it means the number of people going into foreclosure will continue to decline this year. And that is important for all homeowners in areas where cheaply priced foreclosures are cutting neighboring values.

In high-foreclosure cities like Las Vegas, Phoenix and Miami, for example, homes have lost roughly half their values from their peaks.

Las Vegas-based Home Builders Research reported a new-home median price of $216,854 in December, down 11.5 percent from the same month in the previous year, and existing home median price of $123,000, down 24.6 percent.

But Friday's report from the mortgage bankers showed Nevada, Arizona and Florida had some of the biggest declines in new delinquencies.

David Brownell of Keller Williams Realty in Las Vegas reported real estate-owned, or bank-owned, inventory of 1,688 homes in January, down 79 percent from 7,915 in the same month a year ago. They represent 16.5 percent of total inventory, compared with 37.8 percent a year ago.

Even more interesting, Brownell found, is the rise in the number of short sales, or homes sold for less than the mortgage owed, upon lender approval. There were 685 short sales in January, a 127 percent increase from a year ago.

By the end of this year, that number will grow, Brownell predicted. Pending short sales totaled 9,595 in January, nearly five times the 1,951 in January 2009.

"The Las Vegas statistics, both current inventory of REO homes on the market and REO sales, are consistent with the MBA report," Brownell said Friday. "What we're hearing from the banks is the word 'foreclosure' is the last-resort option. We're hearing about more loan modifications and short sales."

There will be, however, more short-term pain. Nearly half of all delinquent borrowers were at least three months behind on their payments, up from a typical level of under 20 percent.

Across all loan types, states with the highest overall delinquency rates were Nevada (14.92 percent), Mississippi (14.69 percent) and Georgia (13.53 percent). Of the 543,596 loans serviced in Nevada, 3.41 percent were 30 days past due, 2.24 percent were 60 days past due and 9.28 percent were 90 days past due.

Based on foreclosure inventory, the states with the highest rates were Florida (13.44 percent), Nevada (9.76 percent) and Arizona (6.07 percent). For foreclosure starts, it was Nevada (3.04 percent), Florida (2.41 percent) and Arizona (2.18 percent).

Banks have prolonged the foreclosure process, traditionally between four and six months, as they evaluate borrowers for help under the Obama administration's $75 billion mortgage relief effort. It lowers borrowers payments to as low as 2 percent for five years and extends loan terms to as long as 40 years.

But experts warn that hundreds of thousands of borrowers won't be eligible or won't complete the process. So far, only 116,300 borrowers out of about 1 million who enrolled have had the terms of their mortgages changed permanently.

Bank of America vice president John Ciresi told the Las Vegas Review-Journal in January that the bank would release about 500 homes a month in Nevada this year, part of the "shadow inventory" of foreclosure homes being held by lenders.

It doesn't bode well for local home prices if other banks release hundreds of foreclosures each month, housing analyst Dennis Smith of Home Builders Research said.

Obama, meanwhile, announced Friday that housing agencies in the five hardest-hit states will receive $1.5 billion to help spur local solutions. Those five are Arizona, California, Florida, Michigan and Nevada. Nevada will get $100 million of federal funds.

Review-Journal writer Hubble Smith contributed to this report.