Serious Delinquencies Trending Down

By:: Kara Johnson | November 03, 2010

Serious delinquencies among conforming mortgages have posted another monthly decline, continuing a trend since last February, according to new data from government-backed lenders Fannie Mae and Freddie Mac.

Freddie Mac reported today that its serious delinquency rate for single-family homes fell to 3.80 in September, the seventh consecutive month the rate has fallen or remained unchanged. That follows last week’s report by Fannie Mae that its serious delinquency rate fell to 4.70 percent in August, in a trend of unbroken declines that also dates back to February.

The two rates were down three and 12 basis points from the preceding months, respectively.

Serious delinquencies for both lenders peaked in February, with Freddie Mac at 4.20 percent and Fannie Mae at 5.59 percent, and have been improving steadily since. The current figures are the lowest serious delinquencies have been since Oct. 2009 and Aug. 2009, respectively.

Meanwhile, both lenders have been reporting shrinking mortgage portfolios as liquidations, including foreclosures and paid-off loans, have generally exceeded new mortgages issued this year. Freddie Mac reports that its total mortgage portfolio shrank at an annual rate of 7.1 percent in September, and has declined at an average rate of 3.1 percent year-to-date, with declines in every month but April. Fannie Mae’s portfolio increased at a rate of 2.0 percent in September, but has declined at an average rate of 1.3 percent since the first of the year.

By contrast, both lenders grew their portfolios in 2009, with Fannie Mae showing a 4.2 percent annual growth rate and Freddie Mac increasing its portfolio by 2.0 percent.

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