Mortgage Default Rates Are Years Away From 'Normal'

The economists also noted that the percentage of loans at least 90 days past due ticked up from the third quarter on a non-seasonally adjusted basis to 3.04%. That means foreclosure actions could rise in the coming months.

While delinquency rates overall are heading in the right direction, they remain well above the normal rate of less than 1%.

Mike Frantotoni, vice president of MBA, said in a conference call that we are still "two to three years away" from getting to the historically normal level of delinquency and that is "if the economy cooperates."

Some measures, like the 30-day delinquency levels, were already at their lowest level since 2005, which is promising because it is a leading indicator.

Other measures, such as the foreclosure inventory rate, might take longer to revert to normal, he said.

-- Written by Shanthi Bharatwaj in New York

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