The Chicago-headquartered credit reporting agency TransUnion says that as long as the US economy continues without any more serious setbacks, the number of people with mortgages who are behind on their payments should go down impressively by next year’s end.
The percentage of people who are 60 days or more late on their mortgage payment, known as the delinquency rate, will most probably slightly increase to about 6 percent in the first quarter of 2012, announced TransUnion in its annual forecast for delinquency rates on Wednesday.
But by the end of 2012 that rate could further fall to only 5 percent, according to TransUnion. That is a large change from the high point at the end of 2009 when the delinquency rate reached 6.89 percent.
The prediction weighs a number of economic factors when forecasting the future of mortgage delinquency rates, including consumer confidence and an improved general economy. In addition, banks are most likely removing a large portion of pending foreclosures from their books this coming year, according to Charlie Wise, director of research and consulting for TransUnion.
There is still a large backlog of foreclosure in the computers of banks partly due to the robo-signing scandal earlier this year. In that event bank officials signed off on mortgage documents, often using computerized, automatic “robot” programs, without human intervention verifying that the mortgage requests were legitimate or if the borrowers could pay back their loans.
This issue blew up last year, forcing banks to backtrack and review foreclosures across the country, verifying that all the paper work was in order.
Because of this backlog the entire process was dragged out, leaving mortgages listed as delinquent longer than they should have been which caused a temporary rise in the delinquency rates.
“We have a long way to go to get back,” said Steven Chaouki, a TransUnion vice president.