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Late mortgage payments decline to a five-year low

LOS ANGELES — Fewer homeowners are falling behind on mortgage payments, aided by rising home values, low interest rates, and job gains. The late-payment rate in the third quarter to a five-year low, the credit reporting agency TransUnion said Tuesday.

The percentage of mortgage holders at least two months behind fell to 4.09 percent from a revised 5.33 percent a year earlier and from 4.32 percent in the second quarter. The last time the rate was lower was the third quarter of 2008.

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Mortgage delinquencies peaked at nearly 7 percent in the fourth quarter of 2009.

The rate of late payments has been steadily declining for five quarters. At the same time, US home sales and prices have been rebounding, while foreclosures have been declining.

Even so, the mortgage delinquency rate is still above the 1 to 2 percent average historical range. That suggests many still are struggling to make their payments. It also reflects that many loans made during the housing boom remain unpaid but have yet to work their way through foreclosure.

Loans made in the years after the housing boom are generally being paid on time, so as more of the older loans listed on banks’ books as unpaid get resolved, the overall mortgage delinquency rate should continue to decline, said Tim Martin, group vice president of US housing for TransUnion.

TransUnion forecasts that the national mortgage delinquency rate will drop to just under 4 percent by the end of year.

All states posted an annual drop in late-payment rates during the third quarter, with California, Nevada, Arizona, Colorado, and Utah registering declines of more than 30 percent.

TransUnion draws its data from 52 million installment-based mortgages.

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