Two reports released Monday raise hope that the country's tide of home-loan defaults may finally be starting to recede, but the picture is far from clear.
Credit data giant TransUnion said serious delinquencies — home loans on which borrowers are at least 60 days behind on payments — fell slightly across the nation in the first quarter of 2010, marking the first such decline in three years. Such delinquencies amounted to 6.77% of all home loans, down from 6.89% in the fourth quarter of last year.
A separate report from rating firm Fitch Inc. said serious delinquencies on subprime loans that were packaged into mortgage-backed securities fell for the second month in a row as more borrowers obtained loan modifications or caught up on payments on their own. Serious delinquencies still accounted for a sky-high portion — 45.2% — of all subprime loans, down from 46.3% in March.
Mark Zandi, chief economist of Moody's Analytics, said in an interview that many of the worst loans had been cleared out and that mortgages written in the last three years — with far higher standards and at far lower home prices — were holding up better.
With the economy now adding jobs, the peak in borrowers' missing one or two payments has passed, Zandi said, although the percentage of loans that are 90 or 120 days late may still rise a bit.
"And there's still a boatload of loans in the foreclosure process," he said.
Because of the homes in foreclosure, U.S. housing prices might still fall somewhat, Zandi said. But prices probably have bottomed in Southern California, because foreclosures here hit so hard and early and because investors have started to buy houses in the region, he said.
The drop in delinquencies may be only a temporary effect of tax refunds received by troubled borrowers, said Vincent Barberio, a managing director at Fitch.
"The next few months will be a better indicator of whether we're witnessing the beginnings of a legitimate turnaround," he said in a statement.
Delinquencies on so-called alt-A loans fell for the first time in four years, Fitch said. Such mortgages were made to people who had decent credit histories but weren't considered the top-quality borrowers for certain reasons, such as no proof of their income.
Delinquencies on alt-A loans in bundles backing securities decreased to 34.1% in April from 34.4% in March, the first monthly decline since April 2006.
More than half of alt-A loans were made in California and Florida. Delinquencies on alt-A loans fell to 35.8% in California from 36.3% the previous month and remained unchanged in Florida at 51.7%.