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TransUnion: Mortgage Delinquency Rate Drops Below 4% -- First Time Since 2008

CHICAGO, IL--(Marketwired - Feb 12, 2014) - The mortgage delinquency rate (the rate of borrowers 60 days or more delinquent on their mortgages) dropped below 4% for the first time since 2008, ending Q4 2013 at 3.85%. The mortgage delinquency rate declined for the eighth consecutive quarter from 4.09% in Q3 2013 while dropping more than 24% from one year earlier (5.08% in Q4 2012).

All 50 states and the District of Columbia experienced a decline in their mortgage delinquency rates between Q4 2012 and Q4 2013. Only two states -- New Jersey and New York -- did not have double-digit percentage declines in their respective delinquency rates.

The data provided are gathered from TransUnion's proprietary Industry Insights Report, a quarterly overview summarizing data, trends and perspectives on the U.S. consumer lending industry. The report is based on anonymized credit data from virtually every credit-active consumer in the United States.

"It's encouraging to see the mortgage delinquency rate drop for two consecutive years, but at the same time, mortgage delinquencies continue to be twice as high as levels observed prior to the housing bubble," said Steve Chaouki, head of financial services for TransUnion. "The housing market also still shows some volatility, with both housing prices and originations dropping in the latter part of 2013 after experiencing improvements in the first part of the year."

TransUnion recorded 52.84 million mortgage accounts as of Q4 2013, down from 53.85 million in Q4 2012. There are more than 10 million fewer accounts as compared to the same period in 2008 (62.85 million).

"New account originations have declined significantly in recent quarters," said Chaouki. "This is primarily related to recent spikes in interest rates, particularly in the refinance market. Additionally, continuing tight lending standards remain a factor in some sectors of the market."

Viewed one quarter in arrears (to ensure all accounts are included in the data), new account originations dropped from 2.29 million in Q3 2012 to 1.95 million in Q3 2013. Interestingly, the non-prime population (those consumers with a VantageScore® 2.0 credit score lower than 700) did see an increase in their share of originations, rising from 5.55% in Q3 2012 to 6.61% in Q3 2013. Despite the increase, the percentage of non-prime account originations remains well below those observed just six years ago (16.26% in Q3 2007).

TransUnion is forecasting that the downward consumer delinquency trend will continue into the first quarter of 2014, with mortgage delinquencies falling to approximately 3.70% by the end of March.

TransUnion's forecast is based on various economic assumptions, such as gross state product, consumer sentiment, unemployment rates, real personal income, and real estate values. The forecast would change if there are unanticipated shocks to the economy affecting recovery in the housing market or if home prices begin to depreciate once again.

"Mortgage loans originated in the last few years have significantly higher credit quality than those originated prior to the recession, with delinquency rates that resemble those seen seven to 10 years ago," said Chaouki. "As older mortgages continue to slowly exit the system, the industry will experience continued declines in mortgage overall delinquencies."

This information is reported by TransUnion and is part of its ongoing series of quarterly analyses of credit-active U.S. consumers and how they are managing credit related to mortgages, credit cards and auto loans. To subscribe to TransUnion news releases, please click here

Q4 2013 Mortgage Statistics - Delinquency Rates

 Quarter over Quarter Q3 2013 Q4 2013 Pct. Change
 USA 4.09% 3.85% (5.9%)

 Year over year Q4 2012 Q4 2013 Pct. Change
 USA 5.08% 3.85% (24.2%)

 Mortgage Delinquency Rate for Select States  Q4 2013
 California 3.06%
 Florida 8.18%
 Illinois 4.17%
 New York 5.67%
 Texas 3.38%

 Largest Year-over-Year Declines Q4 2012 Q4 2013 Pct. Change
 Arizona 5.11% 3.14% (38.6%)
 California 4.92% 3.06% (37.8%)
 Nevada 9.98% 6.52% (34.7%)

 Smallest Year-over-Year Declines Q4 2012 Q4 2013 Pct. Change
 New York 6.20% 5.67% (8.5%)
 New Jersey 7.60% 6.86% (9.7%)
 West Virginia 3.49% 3.11% (10.9%)

About TransUnion

As a global leader in credit and information management, TransUnion creates advantages for millions of people around the world by gathering, analyzing and delivering information. For businesses, TransUnion helps improve efficiency, manage risk, reduce costs and increase revenue by delivering comprehensive data and advanced analytics and decisioning. For consumers, TransUnion provides the tools, resources and education to help manage their credit health and achieve their financial goals. Through these and other efforts, TransUnion is working to build stronger economies worldwide. Founded in 1968 and headquartered in Chicago, TransUnion reaches businesses and consumers in 33 countries around the world on five continents. www.transunion.com/business