Borrowers who owe more than their properties are worth continue to struggle to pay off debts incurred during the real estate bubble as buildings’ values have plummeted as much as 37% from 2007 peaks.
Of 2007 loans maturing in the second quarter, 20% were able to pay off in full, down from 36% in the previous three-month period, according to Nomura Holdings Inc. The delinquency rate may be leveling off as the majority of five-year loans reached their maturity date during the first half of this year, according to JPMorgan Chase & Co. More than $13 billion of those loans came due through June 30, compared with $3.8 billion for the rest of 2012, the report stated.
The proportion of past-due loans may have started to moderate in June, according to estimates from Fitch Ratings, with late payments falling three basis points to 8.65% from the prior month, although the next few months should reveal whether June’s leveling off of delinquencies was the start of a trend or just a blip, Fitch officials added.
Mortgage payments more than 60 days late decreased 11 basis points to 9.34% in July, marking the first monthly decline since January, according to Wells Fargo & Co. Still, loans totaling $3.5 billion fell behind for the first time this month.