Residential delinquencies – excluding foreclosures – fell to 7.99% in the third quarter, the lowest reading since late 2008, when the nation's financial crisis was peaking, according to new figures released by the Mortgage Bankers Association (MBA).

However, seriously delinquent mortgages – those where the payment is late by 90 days or the loan is part of the foreclosure inventory – rose to 7.89% of outstanding loans, a 4 basis point increase from the prior quarter.

Also, the foreclosure starts rate rose to 1.08% from 0.96% in 2Q. A year ago the rate was at 1.34%.

According to figures compiled by National Mortgage News, consumers owe $9.3 trillion on their home mortgages, which means $743 billion of loans potentially may go south in the years ahead.

On a sequential basis, MBA found that delinquencies fell in 3Q for all product types, including prime, subprime, and Federal Housing Administration/Department of Veterans Affairs.

At Sept. 30, subprime ARMs had the highest delinquency rate (25.07%) followed by subprime FRMs (21.24%), and FHA loans (12.09%).

Prime FRMs had the lowest delinquency rate: 4.32%.

“While the delinquency picture changed for the better in the third quarter, the foreclosure data indicated that we are not out of the woods yet and that the issues continue to vary by geography,” said MBA vice president of research Michael Fratantoni.

The MBA executive noted that the increase in the foreclosure starts rate was driven by large increases “from just a few servicers,” concentrated in states where real estate values have suffered the most.

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