Loan delinquencies seen falling

Mass. homeowners expected to get back on track in 2010

By Jenifer B. McKim
Globe Staff / December 8, 2009

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Massachusetts homeowners are expected to reverse a four-year upward trend in mortgage delinquency rates by the first quarter of next year, with more able to make payments on time, according to a study released yesterday by the Chicago-based credit bureau TransUnion.

The rate should fall in the first quarter of 2010 because of better economic indicators in housing and a decline in unemployment - landing at about 4.66 percent by the last quarter - TransUnion officials predict. The delinquency rate is based on borrowers who are at least 60 days behind on mortgage payments.

TransUnion vice president FJ Guarrera said the delinquency rate increases have slowed over the last three quarters and should reverse direction soon. He likened the change to what happens when a ball is thrown in the air - first it slows and then it turns around.

“It’s good news,’’ Guarrera said. “We feel this has no longer to be an anomaly; we see it as a trend.’’

Before that happens, however, there will be one more quarter of bad news, TransUnion said - an increas ing number of Massachusetts homeowners will default on mortgage loans through the end of this year, swelling the number who are 60 days late on payments to 4.84 percent during the last quarter of 2009 compared with 3.54 percent during the same time last year.

TransUnion would not give the Globe permission to print the study’s national data today because of an exclusivity agreement it said it made with another media outlet, but the company expects the national delinquency rate will also drop in 2010.

Historically, Massachusetts mortgage delinquency rates have been lower than national averages, even though homeowners here borrow more than the national average, Guarrera said. On average, Massachusetts homeowners currently carry about $232,187 in mortgage debt.

The new data add to growing evidence that the nation’s current housing crisis may be subsiding.

“Everything seems to be stabilizing,’’ said Wellesley economics professor Karl E. Case, cofounder of the S&P Case-Shiller Home Price Indices, which track national home sales. But Case added that the nation’s real estate problems are “not over yet.’’

Paul S. Willen, a senior economist at the Federal Reserve Bank of Boston, said that even if the housing market is turning around, the process will be slow. “I anticipate the [delinquency] rate going down but very gradually. I anticipate foreclosure problems for years to come.’’

Jenifer B. McKim can be reached at