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Late Mortgage Payments Continue Falling In 4th Qtr

NEW YORK (AP) - More homeowners across the country made their mortgage payments on time in the fourth quarter, but with housing prices falling again, prospects for significant improvement in 2011 have faded.

Credit reporting agency TransUnion found that 6.41 percent of homeowners were behind on their mortgages by 60 days or more during the last three months of 2010. It marked the fourth-straight period the rate fell, and was down from 6.89 percent in 2009's fourth quarter, when delinquencies peaked.

But while TransUnion analysts until recently expected the figure to continue to drop this year, they are now predicting a flat rate through 2011, mainly because of recent housing price declines.

The Standard & Poor's/Case-Shiller 20-city home price index found home prices dropped in November across most of America's largest cities, and average prices in eight major markets hit their lowest point since the housing bust.

There's a strong correlation between delinquency rates and falling housing prices, said Tim Martin, who follows the U.S. housing market for TransUnion's financial services unit. He said while the delinquency rate declined through each quarter of 2010, the drop was smaller each period, as the housing market sputtered.

What's more, in the fourth quarter, even though the overall mortgage delinquency rate for the country fell, there were increases from the third quarter in 33 states.

"The data would say that these things are clearly related," Martin said.

Notably, the largest reduction in delinquency for 2010 was found California, where the rate fell to 9.14 percent from 11 percent. Case-Shiller found that Los Angeles, San Diego and San Francisco showed some of the largest housing price gains over the same period.

To be sure, housing prices are not the only thing that impacts delinquency rates. Unemployment and household income, regional economic activity, interest rates and other factors also play a role. But Martin said housing prices and supply are key elements in the equation.

"There's pressure on prices, and if prices drop, it tends to lead to delinquencies," he said.

TransUnion culls its data from 27 million anonymous consumer records, which represent a random sample of about 10 percent of its national consumer credit database.

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