by Calculated Risk on 10/27/2010 03:59:00 PM

The following graph shows the Freddie Mac serious delinquency rate (loans that are "three monthly payments or more past due or in foreclosure"):

Click on graph for larger image in new window.

Freddie Mac reports that the serious delinquency rate declined to 3.80% in September, from 3.83% in August.

Some of the rapid increase last year was probably because of foreclosure moratoriums, and distortions from modification programs because loans in trial mods were considered delinquent until the modifications were made permanent.

As modifications have become permanent, they are no longer counted as delinquent. Also, both Fannie Mae and Freddie Mac started foreclosing again (they have a record number of REOs) - and REO (real estate owned) is not counted in the delinquency rate.

The delinquency rate will probably start increasing again in October because of more foreclosure moratoriums, and possibly from falling house prices.