Mortgage Debt Decreases by $350 Billion Over Last 12 Months

By Liz Clinger Updated on 6/1/2012

According to the Federal Reserve Bank of New York, $350 billion in mortgage debt decreases occurred over the last 12 months, by payoffs, foreclosure or other forfeiture in lieu of eviction. Consumer credit reports on mortgage balances met peak highs at around $9 trillion in 2008 and decreased to close to $8.2 trillion as of March 31, 2012.

According to the report, new mortgage originations on credit reports are increasing, while foreclosures remain subdued.

In 1Q of 2012, consumers released $81 billion in mortgage debt following a reduction of $134 billion in the 4Q of 2011 and $114 billion reduction in 3Q of 2011.
New mortgage originations in 2012’s 1Q reached $412 billion, up $8 billion from 2011’s 4Q.

Foreclosure activity for the 1Q this year shows 219,000 foreclosures on borrower reports, according to credit reporting agencies, which is about the same activity as 4Q 2011, though a 21% decrease from 1Q 2011. The 90-day delinquency transition rate to current status was the best since early 2011 from the slowing of foreclosures, before then the rate of curing a delinquent loan to current status remained below severely delinquent transitions since mid-2007.

According to the senior economist at the New York Fed, student loan debt is “the only form of consumer debt to substantially increase since the peak of household debt in late 2008.” As mortgage and credit card debt has shown declines, student loan debt is still growing, with a $30 billion dollar increase in the 1Q, reaching $904 billion on consumer credit reports since the end of last year.

Overall consumer debt decreased in the 1Q around 1% from 2011’s 4Q, reaching $11.44 trillion.