Severely delinquent balances among first mortgages are declining, according to Equifax's May National Consumer Credit Trends Report.

The total of $450 billion in delinquent balances is a 37% decline from the peak of more than $700 billion in January 2010. Of note is that 70% of outstanding delinquencies among first mortgages still remain tied to loans opened between 2005-2007.

The greatest change occurred among severely delinquent non-agency first mortgage loans (90-plus days past due or in foreclosure), which fell 45% to $320 billion in May from its peak of $580 billion in January 2010.

By comparison, agency-sourced (Fannie Mae, Freddie Mac, FHA and VA) first mortgages reported as severely delinquent declined just 9% to $130 billion in May after peaking at $142 billion in January 2010.

Similar reductions in severely delinquent totals were seen among home equity installment loans, which declined 31% from a peak in February 2011 ($880 million) to May ($615 million).

"That severe mortgage delinquencies are trending downward is not surprising given generally improving economic conditions," said Equifax Chief Economist Amy Crews Cutts. "What is surprising is that even with the foreclosure moratoriums and the slow resolution of foreclosure backlogs, the downward trend has been a steady, consistent drumbeat of recovery. If this pace continues, we expect the volume of severely delinquent mortgage balances to return to mid-2007 levels by the end of 2014."

Other highlights include:

Home equity revolving balances fell 18% from their peak of $680 billion in May 2009 to $560 billion in May.

Total credit limits among home equity revolving accounts have declined 27% to $1.02 trillion in May since their peak in March 2008 ($1.30 trillion).

Year-to-date total mortgage write-offs through May are down 28% from their 2010 peak. Home mortgage balances are down 12.5% in May from their record-high of $9.8 trillion set in October 2008. Total mortgage debt outstanding now sits at $8.6 trillion.

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