Nevada’s housing debt outlook gets better

Nevada had the second-highest mortgage delinquency rate in the nation in the first quarter at 11.16 percent, well above the national rate of 5.78 percent, TransUnion credit bureau reported Wednesday.

While Nevada is still second only to Florida’s 13.87 percent delinquency rate, it’s definitely an improvement from 14.19 percent in the year-ago period and a high of 16.19 percent in fourth quarter 2009, said Tim Martin, group vice president of U.S. Housing for Chicago-based TransUnion.

"You’ve got a long way to go, but it’s very encouraging," Martin said. "There’s a positive story here in that your improvement has been good, so there might be a chance for lenders to get back into Las Vegas and extend more credit to Las Vegans."

One of the challenges to housing recovery in Las Vegas is the lack of available financing in the wake of the subprime mortgage crisis.

The high delinquency rate in Las Vegas plays a role in financing, but it’s more about the individual’s credit rating and background, Martin said.

It’s certainly not good to have a foreclosure or recent short sale on your record, he said.

Nevada was the top state with a 6.2 percent year-over-year decline in average mortgage debt, dropping to $215,312 in the first quarter from $229,457 a year ago. The average national mortgage debt was $188,196 in the first quarter, down 1 percent from a year ago.

The national mortgage delinquency rate is down from 6.01 percent in the fourth quarter, following two quarters of increases. Prior to third quarter, 60-day mortgage delinquencies rates had dropped for six consecutive quarters. All but eight states experienced decreases in mortgage delinquency rates.

Martin said it’s certainly welcome news that more homeowners were able to make their mortgage payments than a year ago. While the national rate is still about three times above the prerecession norm, this should mark the start of consistent improvement each quarter, he said.

Home prices continue to face downward pressure and unemployment remains high, but many see the economic environment beginning to show modest improvement.

TransUnion’s forecast predicts mortgage delinquency rates will drift downward in 2012 as more homeowners are able to repay their mortgage debt obligations.

"Unemployment is getting better, and macro indicators like gross domestic product and retail sales are improving," Martin said. "It’s encouraging news."

Martin said he has seen increased refinance activity through Home Affordable Refinance Program , which makes it easier for homeowners with negative equity in their home to refinance.

As homeowners take advantage of historic low mortgage interest rates and lower their monthly payment in the process, it may have some positive impact on the overall delinquency rate starting later this year, Martin said.

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.