By Leah Schnurr
NEW YORK (Reuters) - The mortgage delinquency rate in the U.S. fell last quarter as the economy improved but homes in foreclosure rose as the process became log-jammed late last year, the Mortgage Bankers Association said on Thursday.
The rate of delinquency on single-family homes for the fourth quarter declined to 8.22 percent of all loans outstanding from 9.13 percent in the previous quarter, the MBA said in its quarterly study.
As well, the number of loans that were 30 days past due -- a more cyclical component influenced by the state of the economy -- fell back to prerecession levels at 3.25 percent from 3.36 percent.
MBA chief economist Jay Brinkmann said the improvement came as the economy strengthened and the labor market showed signs of stabilization in the later part of 2010.
"We would expect a continued drop barring any significant change in the economy," said Brinkmann.
Foreclosure starts also slipped, but the number of loans in the foreclosure process rose as major loan servicers halted foreclosures in the fall of last year due to investigations into the industry's practices.
"We have fewer loans going into the bucket, it's just that for a while it was taking the bucket a lot longer to empty," said Brinkmann. He said he expects the amount of inventory to start decreasing.
Loans in the foreclosure process rose to 4.63 percent from 4.39 percent, matching an all-time high hit in the beginning of 2010. Foreclosure starts slipped to 1.27 percent from 1.34 percent.
The slight change in new foreclosures "would represent a positive development suggesting that banks systematically work through the backlog of distressed properties," Yelena Shulyatyeva, an economist at BNP Paribas, wrote in a note.
High unemployment and the glut of houses on the market remain two of the biggest challenges facing the sector that has yet to recover from its collapse. The large amount of homes facing foreclosure exacerbates the problem as more houses come on the market.
(Reporting by Leah Schnurr; Editing by Andrew Hay)
