Lenders initiated foreclosure proceedings on just 0.4 percent of home loans in the second quarter, down from 0.45 percent in the previous three months, according to the Mortgage Bankers Association.
The rate of so-called foreclosure starts is far below the 1.42 percent pace seen at the peak of the financial crisis in the third quarter of 2009. The second quarter of 2006 was the last time the rate was this low. The mortgage delinquency rate was a seasonally adjusted 6.04 percent, the lowest since the end of 2007 and down from 6.11 percent in the first quarter.
Home price appreciation and the rebounding job market helped drive down delinquencies, says MBA chief economist Mike Fratantoni. Still, banks must work though more than 1 million loans already in the foreclosure process, which will likely take two to three more years, estimates Moody's chief economist Mark Zandi. "Ten years later, the already-painful foreclosure crisis is finally coming down to an end," he says.