Mortgages at least 30 days delinquent or in some stage of foreclosure fell to 5 million in March, down from a peak of 7.7 million in January 2010, according to Lender Processing Services, a real estate information service based in Jacksonville, Fla.

Restrictive lending standards have made it harder for borrowers to obtain mortgages, helping lower default rates while also reducing the homeownership rate in the first quarter to 65%, the lowest since 1995.

The Federal Housing Administration, which offers loans to buyers with down payments as low as 3.5%, has steadily raised its credit scores. In the third quarter of 2012, the most recent available, 97% of FHA borrowers had credit scores above 620 of a possible 850. In the last quarter of 2006, only 53% had a score above 620.

First-time delinquent home loans fell to 0.84% of the 50.2 million mortgages in March, the first month below 1% since 2007, before an influx of defaults led to the financial crisis, according to a report by Lender Processing Services. The rate of first-time defaults, defined as loans that went from performing to at least 60 days delinquent, peaked at 2.89% in January 2009.

U.S. home prices climbed at the fastest pace since May 2006, rising 9.3% in February from a year ago, according to a report last week from the S&P/Case-Shiller index of property values. The number of home loans with negative equity fell to about 9 million or 18% of homes with a mortgage in January, the report said. That’s down 41% from a year earlier and 47% lower than the peak of 17 million loans in February 2011.

While new defaults have fallen, loans at least 90 days delinquent account for a growing share of the non- performing mortgage pie: 62% this year compared with 30% in 2005, according to Lender Processing Services. The late-stage delinquency loans are increasingly concentrated in so-called judicial states that require court approval for foreclosures.

Florida had the highest rate of non-current mortgages with 18.2% of loans either delinquent or having received a foreclosure notice, followed by New Jersey, Mississippi, Nevada and New York.

While Florida’s problem loans declined over the last year, the number increased 5.8% in New Jersey and 6.1% in New York. 

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