Mortgage Performance Trends in the Southeast: Mixed Results for the Third Quarter

In the six states that, in whole or in part, make up the Sixth Federal Reserve District (Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee), seriously delinquent first mortgages, which include those in foreclosure and 90-plus days delinquent, are down from 11.8 percent in September 2010 to 11.3 percent in September 2011.

That trend does not appear as promising when looking solely at foreclosure rates, which have seen a modest increase from September 2010 (7.1 percent) to September 2011 (7.5 percent). The foreclosure process reviews that began in late 2010 have had a lingering effect and have slowed foreclosure activity in many states, possibly leaving more properties lingering in the foreclosure category for a longer time and driving up overall rates.

Trends since September 2010
For the overall Sixth District, delinquency rates decreased in every category compared to September 2010. Ninety-plus-day delinquent loans led the group, falling from 4.7 percent last year to 3.9 percent this year. The percentage of total loans past due also decreased during that time period (see chart 1).

Each Sixth District state shared in the improved delinquency trend. In fact, compared to September 2010, every state improved in every category other than foreclosure. Alabama, Florida, Mississippi, and Tennessee, however, all have experienced increases in foreclosure rates since last year. The nation as a whole followed a similar pattern, with only foreclosure rates increasing since September 2010, from 3.5 to 3.7 percent.

Florida Driving Southeast Foreclosure Figures but Not Delinquencies
Florida's well-known judicial foreclosure process, which is nearly twice as long as the national average, has considerably lengthened the period during which a home is in foreclosure. As a result of that plus the fact that Florida mortgages represent about 46 percent of mortgages in the six states, Southeast foreclosure rates appear rather high (7.5 percent in September 2011). But as chart 2 shows, isolating the other five states (Alabama, Georgia, Louisiana, Mississippi, and Tennessee) from Florida, the foreclosure story is different, with only 2.4 percent of first liens in the five other states in foreclosure, compared to 12.7 percent in Florida.

Mortgage delinquencies throughout the Southeast states are more similar. For example, 30-day delinquent loans represent 4.3 percent of mortgages in the other five states compared to 2.8 percent in Florida. Mississippi leads the District with 5.8 percent of mortgages 30 days delinquent in September 2011. Not surprisingly, it also leads the District in unemployment, which was 10.5 percent in November 2011.

Learn More
For more information, see the Federal Reserve Bank of Atlanta's Mortgage Delinquency and Foreclosure Trends reports for the third quarter of 2011. Separate reports for each of the six states shed light on the housing situation in the Southeast.

By Kevin Mahoney, research assistant, Federal Reserve Bank of Atlanta's community and economic development department.