According to a Bloomberg report today, delinquent borrowers who caught up on their mortgage payments outnumbered newly delinquent borrowers. This is the first time in nearly four years that this has occurred.
There were 68,675 borrowers with PMI (private mortgage insurance) who fell behind on payments in February. 80,758 borrowers who were behind on their payments became current.
It appears that some of the government relief programs are having an effect on foreclosures. Bank of America, and JP Morgan Chase both reported significant increases in loan modifications in February. The number of borrowers in trial modifications also increased substantially. Some critics contend the modification programs are simply delaying foreclosures, but recent developments are a cause for some optimism.
The decrease in defaults could be a boon for the battered housing market. Other than unemployment, there is no greater impediment to a housing market recovery than foreclosed and distressed houses. They depress property values because of their low cost, and stigmatize neighboring properties.
We will likely need to see this trend continue for several months until we can feel real confidence that the foreclosure epidemic is subsiding, but it is a step in the right direction.
Do you think we have turned the corner on the foreclosure crisis? Join the discussion below.
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