There’s a note of optimism in the air about the U.S. mortgage delinquency rate.

The number of mortgages that were past due in the fourth quarter was at its lowest level since the end of 2008 (excluding homes that are already in foreclosure.) Meanwhile, the number of U.S. mortgages that were one month late last quarter fell to its lowest level since the end of 2007, the Mortgage Bankers Association said Thursday.

The number of homes in foreclosure, however, rose both nationally and in Illinois, thanks to processing delays tied to investigations of servicers’ back-office procedures.

The percentage of total delinquencies on one-to-four unit properties was 8.22 percent in the fourth quarter, compared with 9.13 percent in the third quarter and 9.47 percent in the final quarter of 2009.

In an even better sign, the percentage of loans at least 90 days past due and in the process of foreclosure fell to 8.57 percent nationally, down from 8.7 percent in the third quarter and 9.67 percent a year ago.

“This is really a significant improvement in the underlying situation,” said Michael Fratantoni, the association’s vice president for single family research. “We’re definitely headed in the right direction.”
In Illinois, 9.04 percent of the almost 1.7 million mortgages were past due in the fourth quarter, including almost 70,000 mortgages that were at least 90 days delinquent. That compares with delinquency rates of 9.76 percent at the end of the third quarter and 11.08 percent for the end of 2009.

In part, the improvement may be tied to the tighter loan underwriting that has become a mainstay of the housing market since 2008. Most mortgages that fall into delinquency do so within the first three years. “We simply have a better set of loans entering the peak of the natural default cycle and for that reason I think we’re going to continue to see a decline in the delinquency rates,” said Jay Brinkman, the mortgage bankers’ chief economist.

Also key in the unemployment rate and job creation. The number of jobless individuals in Illinois fell for the ninth consecutive month in December, causing the state’s unemployment rate to fall to 9.3 percent, below the national rate for the second consecutive month.

“The mortgage market is going to reflect how the jobs market improves,” Brinkman said.

The trade group’s survey tracks about 88 percent of all first mortgages.