Mortgage delinquencies continued on their downward path in the first quarter with 7.4% of all loans considered past due, the lowest reading since the third quarter of 2008, according to new figures compiled by the Mortgage Bankers Association.

FHA delinquencies fell to 12% from 12.36% in the fourth quarter while the VA late payment rate increased slightly to 6.57%.

In total, $673 billion of one-to-four family loans are in arrears with an additional $400 billion considered part of the nation’s foreclosure inventory. (The dollar figures are based on MBA’s delinquency report and servicing figures collected by National Mortgage News.)

Delinquencies have been trending down since the first quarter of 2010 when late payments (excluding foreclosures) reached an all-time high of 10.06%.

It’s assumed that foreclosures have slowed since the robo-signing scandal broke into the open two years ago. Although the nation’s largest servicers earlier this year settled foreclosure abuse claims with the government, they have been careful about initiating legal motions to take title of delinquent mortgages, fearing further legal problems and negative publicity.

A year ago the national delinquency rate was 8.32% with a foreclosure inventory ratio of 4.52%.

Delinquencies on subprime loans fell to 20.39% in 1Q compared to 20.83% in 4Q and 24.01% a year earlier.

Loans in the South had the highest delinquency rate in 1Q (8.24%) with the West boasting the lowest late payment rate, 6.38%.

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