Based on earnings reports and call report filings from smaller banks, Trepp is projecting delinquency rate improvements for residential and commercial mortgages in the second quarter compared to the previous quarter.
For first-lien single-family mortgages, total delinquencies are estimated to drop to 12.6% in the second quarter from 12.8% the prior quarter and from 13.3% during the second quarter of 2010. This would mark the fifth straight quarter that residential mortgage delinquencies have fallen.
Serious delinquencies—loans that missed payments by 90 or more days—are expected to drop to 4.6%.
“The slow rate of improvement reflects the still high volume of foreclosures and weak price trends that continue to plaque the market,” Trepp said in its report. “Recovery in the market is looking like it will take a protracted period of time, stretching well beyond 2011.”
The delinquency rate for commercial mortgages is estimated to drop to 5%, a 0.4% change from the previous quarter. According to Trepp, this represents the biggest decline since delinquency rates began to recover in the middle of 2010.
“Larger banks have stepped up their disposals of problem loans,” Trepp said. “Nevertheless, significant declines in operating income and values from their peaks in 2007 will remain an issue for many properties and owners.”
Trepp is expected to release its final quarterly figures by late August.
