The proportion of mortgaged U.S. households 90 or more days behind on payments has had its biggest drop since the mortgage crisis began four years ago, though the figure still remains high. The Mortgage Bankers Association reports that the percentage of mortgages that are seriously delinquent declined from 9.5 to 9.1 percent between the first and second quarters of 2010. That's still alarmingly high, however. Delinquent mortgages accounted for less than 5 percent of all mortgages in 2005 before the crisis began and hit a record high of 9.64 in late 2009. But this recent decrease could signal the beginning of improvement in the long-troubled mortgage market. The rate of foreclosures remained about the same, declining slightly from 4.63 to 4.57 percent. Here's what experts have to say.

  • What Caused the Improvement  The Wall Street Journal's Nick Timiraos writes, "Analysts said the improvement was driven in part by an increase in successful loan modifications during the quarter and by an uptick in home purchases that may have helped at-risk borrowers avoid foreclosure by selling their home."
  • Why It Might Be Temporary  Timiraos adds, "Sales demand was strong during the quarter due to federal tax credits that have expired, which has led to a plunge in home sales in July. Indeed, analysts noted a worrying sign: The number of newly delinquent borrowers increased slightly during the quarter. If that trend continues, it could reverse the recent improvement."
  • Won't End While Unemployment Persists  The Detroit Free Press's Greta Guest writes, "Unemployment is closely tied to the 30-day delinquency figure. 'What is going to happen with delinquencies is going to be a question of jobs. It takes a job to make a mortgage payment,' [Mortgage Bankers Association economist Jay] Brinkmann said on a conference call this morning."
  • Causing Important Drop in Foreclosures  The Atlantic's Daniel Indiviglio has the good news. "The decline in [mortgages that are] 90 or more days past due is a really good sign. Loans this delinquent are generally on the verge of foreclosure. This decline is the first the MBA has seen for this stage since the housing market's troubles began. One potential explanation for the decline could be banks ramping up foreclosures, but they aren't. According to MBA report, foreclosures also fell in the second quarter, to 1.11% from 1.23%. Because additional foreclosures aren't driving down severe delinquencies, the only other explanations are that these loans are becoming current, either through borrowers resuming payments or receiving mortgage modifications, or paid off through sales."
  • But They Could Rise Again  Reuters's Al Yoon is far less optimistic. "Foreclosures could head higher in coming months, however, as the percentage of borrowers at least one payment behind resumed its rise after easing late last year, the MBA said in a report that covers more than 85 percent of the market. The pipeline of delinquencies and huge rise in properties on balance sheets of financial institutions last quarter has aggravated concerns that the critically important housing sector will drag the U.S. economy back into recession."