More Arizonans paid their mortgage payments late during the fourth quarter of 2002, but nationally the rate is declining. The number of loans in foreclosure set a record nationally and increased locally from October to December, according to a quarterly report released Monday.
The Mortgage Bankers Association of America reported Arizona's mortgage delinquency rate rose six basis points to 4.82 percent since the third quarter. The quarterly rate dropped 22 basis points from 5.04 percent, recorded the same period a year ago. One basis point is equal to one-one hundredth of a percentage point.
The delinquency rate measures the number of mortgages that are between 30 days and 90 days past due but haven't entered the foreclosure process. Valley housing analysts said many Valley residents are struggling with their mortgages because of the sluggish local economy and a weak employment base.
Mesa-based Ion Data tracks late payments and foreclosures in the Valley and has been watching the numbers increase since last year. Last week, there were 280 mortgages reported 90-days past due. The next step for these loans will more than likely be foreclosure.
Andrew Doucette, sales manager for Ion Data, estimates there were about 4,500 delinquent mortgages in the Valley from October to December. The Valley number varies from 150 to 400 mortgages per week that are 90-days past due. Carole Jones, a foreclosure specialist who helps owners keep their homes, said she's had an increasing number of calls from struggling Valley residents and lenders are being more helpful.
"That is highly unusual," said Jones, who owns Foreclosure Solution Services in Fountain Hills. "It is a situation that the mortgage companies are being forced to face the issue so they don't continually have these houses."
The number of Arizona loans entering foreclosure in the fourth quarter increased slightly to 0.36 percent from 0.34 percent in the third quarter. The rate was one basis point below the same period a year ago. Arizona has an increasing number of loans in the foreclosure process, rising from 0.76 percent in the third quarter to 0.83 percent in the fourth quarter. The latest rate is up 11 basis points from fourth quarter 2001.
Scottsdale-based economist Elliott Pollack said the increase in local and state trends isn't surprising. "We're not terribly worse off than the national economy," he said. "The economy is still weak nationally and in Arizona and people are getting overextended and losing jobs."
Pollack said things are getting better, but it's gradual.
Nationally, the mortgage delinquency rate dropped 13 basis points from third quarter to 4.53 percent. The rate declined 14 basis points from fourth quarter 2001. National data is seasonally adjusted to work out quirks, but state data isn't adjusted.
"Job losses led to an upturn in delinquencies in the last couple of years," MBA chief economist Doug Duncan said. "Delinquencies seem to have peaked in the 2nd quarter of 2002."
An increase in jobs and stability with current jobs are essential to keep late payments down, he said. "We are not out of the woods, but the trend is modestly improving," Duncan said. The number of national loans entering foreclosure in the fourth quarter declined two basis points to 0.35 percent. Total number of loans in the foreclosure process rose three basis points to 1.18 percent, setting a new record.
"Is it scary? No, because it's 1.18 percent of more than 35 million loans, but they represent individual households so we care about that," Duncan said. The foreclosure process varies from 90 days to two years depending on state laws.
"It appears that the share of loans entering the process of foreclosure is peaking," Duncan said. "We're being cautious because it's a small decline."
