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Mortgage delinquencies may be peaking, but housing market far from normal

A decline in mortgage delinquencies is promising, says the Mortgage Bankers Association. But real estate troubles continue.

In September 2009, this home in Owosso, Mich., was foreclosed upon. The number of mortgage delinquencies dropped sharply at the end of 2009, a sign the foreclosure crisis is beginning to ebb.

Paul Sancya/AP/File

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America’s foreclosure wave showed signs of easing Friday, but the problem is still a long way from over.

The share of mortgage loans in the initial stage of delinquency fell in the fourth quarter of last year, according to numbers released by the Mortgage Bankers Association. The decline in loans one-month past due is a promising sign, because the fewer loans become delinquent, the fewer will end up in foreclosure.

Still, the group said the percentage of loans in foreclosure rose, and the share of loans near foreclosure (90-days past due) remains at record highs.

Essentially, these numbers suggest that the mortgage-default problem may be peaking, but that a long slog remains before the housing market is back to normal.

“This drop is important because 30-day delinquencies … gives us growing confidence that the size of the problem now is about as bad as it will get,” said Jay Brinkmann, the group’s chief economist, in a statement accompanying the new numbers.

The report highlighted the ongoing real estate troubles on a day when President Obama announced a new program designed to prevent foreclosures in the states hardest hit by home-price declines.

The president, in Nevada, announced that $1.5 billion in money from the Troubled Asset Relief Program (TARP) would be made available to state housing agencies in states that have seen home prices fall by 20 percent or more. Those agencies may use the money to aid unemployed mortgage holders, helping to stave off foreclosure until the owners find new jobs.

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