Serious Delinquencies Spikes 54%

The percentage of home loan borrowers who are least 60 days past due on their mortgage rose 54% between the third quarter of 2007 and the third quarter of this year, according to TransUnion.com.

The TransUnion data only add weight to the mounting evidence that credit quality continues to deteriorate, with economic pressure (read: job losses) chipping away at the performance of prime loans as well as subprime loans.

Earlier, the Mortgage Bankers Association noted that nearly one in 10 loans are at least 30 days past due or in foreclosure during the third quarter.

TransUnion's data are important because the 60-day overdue figure is considered a key indicator of upcoming foreclosures. And Fitch's own economists are not optimistic about the outlook for 2009. TransUnion projects that by the fourth quarter of next year, 7.17% of home loans will be at least 60 days past due. TransUnion does not expect the delinquency rate to level off until early 2010.

The 60-day overdue rate already exceeds 7% in states such as Florida and Nevada, and it is approaching 6% today in California, according to the company.

"These are areas clearly where depreciating home values have had an impact on delinquencies," said Ezra Becker, a principal consultant in TransUnion's financial services group.

Nationally, 3.96% of homeowners were 60 or more days past due in the third quarter, marking the seventh consecutive quarter of rising overdue rates, according to TransUnion. That delinquency rate, considered a precursor to foreclosure, was up 12% from the second quarter. States with the highest delinquency rates were Florida, at 7.82%, and Nevada, at 7.71%, the company said. The lowest overdue rates were found in North Dakota, South Dakota and Montana, states where the 60-day overdue rate remained below 2%.

And with unemployment rising fast, there's little hope for relief in the short term, according to Ryan Sweet, an economist at Moody's Economy.com. He told MSN Bulletin that he expects the unemployment rate to rise to 8.5% by early 2010. "Mortgage credit quality is going to decline well into 2009," Mr. Sweet said.